"But isn't part of [America]'s vitality its ability to make these kinds of changes?" I counter. "We've done it before - going from farm to factory, from factory to knowledge work, and from knowledge work to whatever's next."
She looks at me. Then she says, "I'd like to know where you go from knowledge."
As I meet programmers and executives [in India], I hear lots of talk about quality and focus and ISO and CMM certifications and getting the details right. But never - not once - does anybody mention innovation, creativity, or changing the world. Again, it reminds me of Japan in the '80s - dedicated to continuous improvement but often at the expense of bolder leaps of possibility.
And therein lies the opportunity for Americans. It's inevitable that certain things - fabrication, maintenance, testing, upgrades, and other routine knowledge work - will be done overseas. But that leaves plenty for us to do. After all, before these Indian programmers have something to fabricate, maintain, test, or upgrade, that something first must be imagined and invented. And these creations must be explained to customers and marketed to suppliers and entered into the swirl of commerce in a fashion that people notice, all of which require aptitudes that are more difficult to outsource - imagination, empathy, and the ability to forge relationships. After a week in India, it seems clear that the white-collar jobs with any lasting potential in the US won't be classically high tech. Instead, they'll be high concept and high touch.
Another day, another global menace. Today I'm at Patni, the software company where Aparna Jairam worked for two years in the late '90s. Patni's headquarters sits in another section of Mumbai - and as at Hexaware, the contrast between inside and outside is stark. Its interior is Silicon Valley circa 1999 - curvy door handles, funky chairs, a rooftop patio, and a pool table. But when I glance out an office window, just beyond the sidewalk I see a family living in a makeshift dwelling of plywood and tattered plastic.
Patni differs from Hexaware in a few important ways. For starters, it's bigger. Patni is India's sixth-largest software and services exporter; Hexaware ranks 18th. Patni employs about 6,500 people in offices all over the world and has a long-standing relationship with GE and a $100 million investment from the venture capital firm General Atlantic Partners. It also has a more secretive atmosphere. I'm not allowed to ask certain questions (including how much money the workers earn). When I set up my tape recorder for interviews, my ever present Patni minder pulls out his own tape recorder. Although security cameras abound, I'm not allowed on certain floors unless Patni's director of security accompanies me.
Yet for all this muscle-flexing, Patni remains a relative pipsqueak. Its 2002 revenue was about $188 million. That same year, the American IT firm EDS hauled in revenue of $21.5 billion. There's something adolescent about Patni - indeed, about many Indian IT firms. They're growing quickly, but they still don't quite seem like full-fledged adults. From an Indian perspective, though, this moment is understandably invigorating. The country now has the second-fastest-growing economy in the world. Within four years, IT outsourcing will be a $57 billion annual industry - responsible for 7 percent of India's GDP and employing some 4 million people.
But from an American perspective, the threat this poses seems pretty meager. A $57 billion market represents about 0.5 percent of US GDP. And for added perspective, it's important to continue looking out those windows. India has a long way to go. Nearly a quarter of the country lives in poverty. The telecommunications infrastructure is subpar. And modernity stands just steps away from ancient animosities. The week I was in Mumbai, global business guru and former MIT dean Lester Thurow was in town trumpeting the possibilities of "Brand India" - as militants planted bombs in taxis and killed 53 people.
Nonetheless, as with all adolescents, through the gangliness and overconfidence you can glimpse the contours of the future. Patni's hallways are filled with the air of inevitability. Project manager Aditya Deshmukh worked in Baltimore and New Jersey for three years but has no desire to return to the States; India's where the action is. More than half of the Fortune 500 companies are already outsourcing work to India. One reason: Nearly every educated person here speaks English. For India - especially in its competition with China, where few have mastered Western languages - English is the killer app. This company and this industry will undoubtedly grow bigger, stronger, and smarter. That represents a threat to the status quo in the US. But such threats are an established pattern in our history. As Deshmukh reminds me before I have a chance to cover my ears and flee, "Change is the only constant."
A century ago, 40 percent of Americans worked on farms. Today, the farm sector employs about 3 percent of our workforce. But our agriculture economy still outproduces all but two countries. Fifty years ago, most of the US labor force worked in factories. Today, only about 14 percent is in manufacturing. But we've still got the largest manufacturing economy in the world - worth about $1.9 trillion in 2002. We've seen this movie before - and it's always had a happy ending. The only difference this time is that the protagonists are forging pixels instead of steel. And accountants, financial analysts, and other number crunchers, prepare for your close-up. Your jobs are next. After all, to export sneakers or sweatshirts, companies need an intercontinental supply chain. To export software or spreadsheets, somebody just needs to hit Return.
Wired's Accompanying Editorial:
For US workers, the path beyond services seems uncertain. But again, history provides a guide. Thirty years ago, another form of outsourcing hit the US service sector: the computer. That led to a swarm of soulless processing machines, promoted by management consultants and embraced by profit-obsessed executives gobbling jobs in a push for efficiency. If today's cry of the displaced is "They sent my job to India!" yesterday's was "I was replaced by a computer!"
Then, as now, the potential for disruption seemed infinite. Data crunching was just the start. Soon electronic brains would replace most of the accounting department, the typing pool, and the switchboard. After that, the thinking went, the modern corporation would apply the same technology to middle management, business analysis, and, ultimately, decisionmaking. If your job was emptying an inbox and filling an outbox, you were begging for someone to draw the I/O analogy - and act on it. Indeed, computer terminology is littered with traces of what were formerly jobs: printers, monitors, file managers; even computers themselves used to be people, not machines.
Computers have, of course, reshaped the workplace. But they have also proved remarkably effective at creating jobs. Bookkeepers of old, adding columns in ledgers, are today's financial analysts, wielding Excel and PowerPoint in boardroom strategy sessions. Secretaries have morphed into executive assistants, more aides-de-camp than stenographers. Typesetters have become designers. True, in many cases different people filled the new jobs, leaving millions painfully displaced, but over time the net effect was positive - for workers and employers alike.
At the same time, we learned the limits of computers - especially their inability to replace us - and our fear of a silicon invasion diminished. The growing détente was reflected in 40 years of Hollywood films. Desk Set, from 1957, was about a research department head who keeps her job only after a battle of wits with a computer (the machine blows up). By 1988, the computer had moved from threat to weapon: In Working Girl, Melanie Griffith has both a stock market terminal and a PC on her desk and uses her skills and knowledge to move from secretary to private office. By the time Mike Judge made Office Space in 1999, the PC had faded into just another bit of cubicle furniture.
We are now in the Desk Set period with India. The outsourcing wave looks awesome and unstoppable. Like the mystical glass house of the 1970s data processing center, India's outsourcing industry thrums with potential and power, as if it were itself a machine. Today, the outsourcing phenomenon is still mostly in the batch-processing stage: Send instruction electronically, receive results the same way the next morning. But the speed at which the Indian tech industry is learning new skills is breathtaking. Some US firms now outsource their PowerPoint presentations to India, a blow to the pride of managers everywhere. From this perspective, India looks like an artificial intelligence, the superbrain that never arrived in silico. No wonder workers tremble.
But the Melanie Griffith phase is coming, as is the Mike Judge. It's not hard to see how outsourcing to India could lead to the next great era in American enterprise. Today, even innovative firms spend too much money maintaining products: fixing bugs and rolling out nearly identical 2.0 versions. Less than 30 percent of R&D spending at mature software firms goes to true innovation, according to the consulting firm Tech Strategy Partners. Send the maintenance to India and, even after costs, 20 percent of the budget is freed up to come up with the next breakthrough app. The result: more workers focused on real innovation. What comes after services? Creativity.
It surprises/amuses/saddens me to see that editorial column describing today's foreign information technology workforce as -- basically -- somewhere between full humans and soulless computers! Strikingly politically incorrect, for starters.
Here's my view:
Most of what gets called creative or innovative in business prose -- or, worse, boldly creative -- does not ultimately increase total wealth/happiness in the world. Innovation is risky stuff, and it's also very often narrowly self-serving stuff (meaning that the backer himself in some way enjoys a lot of the enterprise's benefits; like how most comic book stores survive only while someone dedicates himself at less than minimum wage). Some big bold business moves turn out to be fabulously successful, but most are not even cost-justified at ledger's end. For this reason, most individuals and most national cultures -- no matter how smart or fully soulfully human they are -- just cannot afford to gamble on big bold business moves.
Newly industrializing -- or informationalizing -- nations should look soullessly copycat.
It doesn't mean Americans have more heart. It just means Americans have more power -- money & relevant experience. Fortunately for those of us who are Americans, we seem to be pretty good at continually leveraging our power to remain on top -- and therefore most able to gamble while meeting basic needs -- and therefore most innovative -- and therefore being the ones to hit upon most of the big novel economic successes -- and therefore continually on top...
There is some truth to the saying about it taking money to make money. And, there's a lot of truth to the saying about practice making perfect. For those reasons, America keeps on doing great, and keeps on getting all the best press.