Hosur Road in Bangalore — India’s Silicon Valley and America’s back office — is dilapidated and dangerous. Cows sacred to Hindus nose through burning garbage. Bodies, dead, drunk or sick, sprawl in gutters as a mass of humanity teems above them.
More than 300 pedestrians died on Bangalore’s mean streets last year. Hosur Road, a four-lane thoroughfare with few crosswalks or traffic lights, is one of the worst in the city, where 800 people are killed in crashes every year.
The road, a half-world away from the East Valley, could hardly be more different from south Chandler, one of our region’s technology hubs, where high-tech powers such as Intel, Microchip Technology, Motorola and others provide thousands of highpaying jobs.
For all of its grime and gridlock, Hosur Road is the main drag to Electronics City, an assemblage of gleaming marble and glass buildings where Indian tech companies have taken root and U.S. companies under pressure to cut costs are mushrooming.
It is in places such as Bangalore’s Electronics City that the East Valley’s high-tech industry faces a challenge from low-paying, aggressive Indian companies with a highly educated work force.
A hiring frenzy is taking place on Hosur Road. Wipro, a billion-dollar software services company, hired 3,500 people last year. Infosys, a competitor, hired 10,000 engineers and plans to add another 10,000 this year. HTMT, which provides customer services, may double its work force to 3,000 this year.
It’s easy to see why when you consider that software engineers in Bangalore earn $20,000 a year — about one-third what U.S. starting engineers make — and call-center employees start at $250 a month.
By some estimates, more engineers are in Bangalore than in Silicon Valley, and 40,000 people hold Ph.D.s.
The corporate signs hanging in every corner of Bangalore say it all: Famil- iar firms such as Oracle, Intel and Hewlett-Packard are all here, creating thousands of jobs Americans will never get.
Despite Bangalore’s shortcomings — widespread poverty, poor services and the unexpected upheaval of May’s national elections that forced former Prime Minister Atal Bihari Vajpayee to resign — the city is posing a direct challenge to Arizona and other states with high-tech industries.
Bangalore in just 10 years has achieved the level of techno-world myth. With more than 6 million residents, the city puts a human face on the debate about outsourcing, the controversial shift of U.S. jobs overseas.
Bangalore sits near the southern tip of the vast Indian subcontinent, 800 miles north of the equator. During its 500-year history, the city was ruled by maharajahs and British overseers while tigers roamed scrub forests nearby.
Today, protected by distance from India’s arch-enemy Pakistan and from politicians in New Delhi, Bangalore has developed into a defense, research, education and industrial hub. More than 1,300 foreign and Indian tech companies with 150,000 employees are represented here.
Texas Instruments, Sun Microsystems, General Electric Co. and other prominent U.S. firms rub shoulders with India’s homegrown giants Wipro, Infosys and Tata Consultancy Services, all billiondollar companies.
‘‘We’ve got a small, mini-U.S. here, a mini-Silicon Valley, a mini-Boston and a mini-Seattle,’’ said professor S. Sadagopan, who runs the Indian Institute of Information Technology, one of the city’s 11 engineering schools churning out hundreds of engineers a year.
The outsourcing tide is escalating. Forrester Research, a Massachusetts technology consulting firm, last month said white-collar jobs are flowing overseas faster than first thought.
In 2002, Forrester predicted 3.3 million jobs would shift to India and other countries by 2015. The forecast touched off a furor about outsourcing, which has become a hot-button issue stirring business and political debate this year.
Forrester now says the losses will come sooner. By the end of next year, 830,000 jobs will have been shipped abroad, 242,000 more than earlier predicted.
Despite a backlash caused by media coverage, companies aren’t abandoning plans to move jobs to India, where they can hire software engineers and fluent English speakers to provide back-office services such as accounting, payroll and help-desk work for thousands of dollars less per year.
The technology sector will be hardest hit — 181,000 jobs by next year, followed by business, management, sales and legal work.
The job flow makes Ravi Ramu smile.
‘‘We wonder sometimes,’’ said Ramu, chief financial officer of MphasiS BFL, an Indian software developer and back-office outsourcing firm, ‘‘when we will become the Silicon Valley of the United States.’’
Although Ramu’s remark is intended as a joke, it’s a reminder of similar comments that have stoked American self-doubt, when the nation felt economically vulnerable and not in control.
At the height of the Cold War, Soviet Premier Nikita Khrushchev rattled Americans when he said, ‘‘whether you like it or not, history is on our side. We will bury you.’’ A year later, in 1957, the Soviet Union launched Sputnik and spawned the space race.
In the early 1990s, many thought Japan’s economy would overtake the U.S. A Japanese politician made headlines in 1992 by calling American workers lazy and illiterate.
Today, the transfer of white-collar jobs to low-wage countries is driving Americans’ anxiety. Invisible during the boom years of the 1990s, outsourcing suddenly is the bogeyman blamed for America’s stumbling economic recovery.
In India, outsourcing’s ground zero is Bangalore. It is a drought-stricken city of simultaneous construction and rot. The city has about 400 officially recognized slums, where 20 percent of the population lives. Alongside tent cities and rubble-filled fields, gleaming buildings spring up to provide state-ofthe art workplaces for thousands of educated software and call-center workers.
‘‘There are contractors who will take a piece of land, put up a building, usually not more than three levels. Excepting for the computers and the instruments and the people, everything is ready in 100 days,’’ said Sadagopan of the information technology institute.
The landscaped campus of his graduate institute was built in 87 days. Founded four years ago, the school pours out doctoral graduates destined for careers in India’s $15 billion technology sector.
‘‘We never have to worry about placing the students. Everybody gets placed,’’ Sadagopan said.
With 1 billion Indians to choose from, companies select only the best. A university degree is mandatory, even for call-center work. For every 100 applicants, companies might hire five.
Software jobs are even tougher to get. Infosys hired 1 percent of the 1 million engineers who sought work with the software development company last year.
Once hired, employees enter a work world where only the best minds thrive. More than 65 percent of the 1,700 scientists and engineers at General Electric’s John F. Welch Technology Center in Bangalore have advanced degrees. One in five have worked somewhere else in the world.
‘‘In Bangalore, we have one of our four global research centers (the others are in Shanghai, Germany and upstate New York). It supports research and development work for all of our businesses around the world,’’ said GE spokesman Peter Stack.
The center, named for former GE chairman Jack Welch, opened in 2000 with 275 engineers, scientists and researchers working in a 183,000-square-foot building. By 2002, the payroll had expanded to 1,525, and the campus grew to more than a half-million square feet supporting research and development work.
‘‘India represents a particularly valuable source of intellectual capital, in terms of employees who are Englishliterate and conversant and the product of an excellent higher educational system,’’ Stack said.
GE has been in India since 1902. Its Indian work force is 20,000 and growing. The company’s New Delhi-based GE Capital International Services unit provides back-office services such as accounting, payroll and help-desk work to the company’s 11 businesses worldwide.
While GE’s presence in India is growing, the company has maintained its U.S. payroll at 160,000 for the past decade, Stack said.
‘‘We’ve aggressively invested in the higher-tech, higher-growth part of our business and work hard to sustain technical advantages in as many of those businesses as possible,’’ he said.
High unemployment in other parts of India, as well as the prospect of jobs that pay more than the country’s $2,600 per-capita income, contribute to Bangalore’s massive population growth. Since 2000, the number of people living in the city has increased by almost 1 million.
As a result, Bangalore has a more diverse population than bigger Indian cities, said Sadagopan, who likened it to New York. Both are cosmopolitan, polyglot cities with large ethnic populations.
Less than half of Bangalore speaks Kannada, the language of the state of Karnataka, which helps explain why English still is spoken widely and cricket is the favorite sport 57 years after the last British governor departed.
The city has a tradition of welcoming outsiders thanks to a research culture that began years ago. Nonmilitary research labs sprang up alongside the military. Institutes are devoted to coconut, pulp, wood, plastic, telecommunications and aeronautical engineering research.
‘‘This city, if you go by per square feet, has the highest number of Ph.D.s in the world,’’ Sadagopan said.
Small wonder that overseas outsourcing is unpopular in the United States.
By a 2-to-1 margin, according to a Harris poll, most Americans disagree with President Bush’s chief economic adviser, Greg Mankiw, who said outsourcing is good for the economy.
More than seven of 10 Americans think U.S. companies should not replace American information technology and call-center workers with cheaper Indian workers, according to the poll.
Complicating the confusion are the benefits outsourcing bestows. By shifting work to India and other low-wage countries, American companies stay competitive with foreign companies, and consumers pay lower prices.
‘‘We deliver extremely highquality software. More than 92 percent of our projects have been delivered on time and within budget,’’ said Mohandas Pai, director and chief financial officer of software developer Infosys.
Sending jobs offshore brings economic benefits, Indian executives say. In America, many call-center jobs are viewed as undesirable, but Indian workers see them as desirable and a step toward a career.
‘‘They are people who want these jobs. These are ‘aspirational’ jobs,’’ said Akshaya Bhargava, chief executive officer of Progeon, a subsidiary of Infosys. ‘‘They are motivated. I think a lot of people who come to work with us are really building a career, and they see this as the first step in their career.’’
Pai believes America’s fears are overblown.
At most, about 240,000 jobs have gone to India during the past five or six years, he said. That number is miniscule compared with employment in the United States, which stands at 140 million.
‘‘People say that, 10 years from now, there will be a shortage of labor in the United States. I don’t know what the number will be, but (the shortage) will be there,’’ said Pai, a jovial tycoon who sniffs at free-trade critics and thinks Americans will come to see outsourcing’s benefits.
The road to Bangalore stretches eastward halfway around the world from the East Valley, 11 time zones away. When a Scottsdale business person clocks out at 6 p.m., a new day dawns in Bangalore.
Indian companies exploit the half-day difference. Programmers in Bangalore labor through the day while their U.S. counterparts sleep. Unhampered by visas, borders or geographic distance, new software code zips across the Internet, arriving in time for the start of business in America.
Low-tech call centers operate the same way. Telemarketers work day shifts to reach Americans at home during the evening.
Technical support employees may toil through the night to solve computer questions or reroute Internet connections of American consumers.
Traveling across Bangalore, however, it seems unlikely India could ever seriously challenge the highly developed economies of the First World such as the United States and Japan. Crushing poverty, unemployment and lack of development are everywhere in India’s fifth-largest city. Telephone and power services are spotty.
Forests of graceful flowering trees that cooled the city have been sacrificed to rapid urbanization. Longtime residents say summer temperatures have risen by 20 degrees. And shortages may force city officials to transport water by train.
