He’ll Take Your Job and Ship It

Atul Vashistha might help move your job overseas one day. He would like you to understand why.

Vashistha, 38, is one of the leading practitioners of “offshoring.” His San Ramon consulting firm, neoIT, helps U.S. companies cut costs by sending work to India, the Philippines and other nations with cheaper labor. By his own estimate, Vashistha’s deals are providing wages to 50,000 workers overseas. Many of those paychecks used to go to white-collar workers in the United States.

Since he was a boy growing up in India, Vashistha wanted to be a global entrepreneur. To get from there to here, he rejected tradition, devoured new information, sought out opportunities and repeatedly retooled himself to respond to changing circumstances.

If he can do it, he says, so can you.

“If you’re a Web programmer, I’m sorry, you have no right to think you can keep your job in the U.S. if you’re using the same technology that existed four years ago,” Vashistha says. “You’ve got to keep moving up. You’ve got to keep going back to school.... If you’re not going to do that, you’re going to lose your job.”

It is a stern warning, and one likely to antagonize the growing ranks of white-collar workers whose careers are at risk. With the U.S. economy only beginning to emerge from a three-year hiring slump, the migration of American jobs overseas has become one of this year’s most explosive political issues.

President Bush is under fire for not doing more to fight it. His chief economist was pilloried for defending it. His Democratic challenger, Massachusetts Sen. John F. Kerry, is promoting new tax laws to slow it down. Angry workers are threatening to seek vengeance for it at the polls.

In the midst of the melee, Vashistha has stepped forward as an apostle of offshoring, corporate shorthand for shifting jobs abroad. In his view, it’s important for workers to hear the truth -- even if it hurts.

Like it or not, Vashistha says, Americans are now part of a global competition for labor. With the advent of the Internet and high-speed telecommunications, virtually any job that can be done at a computer or over the phone can be moved to countries where wages are much lower. And U.S. companies that resist the trend, he says, will be swept away by rivals.

That may spell disaster for workers who are cast aside, Vashistha acknowledges. But there is good news too: In the long term, companies that save money this way will generate new jobs, he says, which will go to workers who are willing to reinvent themselves.

When businesses save money, consumers also benefit through lower prices. It’s part of the continuing cycle of creative destruction that has made America the world’s wealthiest economy, Vashistha argues.

For some workers, Vashistha’s arguments ring hollow. Clifford Cotterill is one of them.

A software engineer for one of the companies on neoIT’s client list, Cotterill, 55, managed to dodge several previous rounds of workforce cuts. But he was recently told his job would be sent to India in May, three months shy of the date he would qualify for early retirement.

“I’ve always taken classes, picked up new technologies. I have pages of training I can include on my resume,” Cotterill says. “They’re not really being honest.”

Vashistha says he empathizes with workers like Cotterill. But he knows there’s not much he can say about the long-term benefits of globalization that would solve the immediate problems of people who get ground up in its gears.

“It is very painful, and I understand that,” he says. “To tell somebody who is 55 years old ... you’ve got to go back to school. But that is the new reality of being competitive.”

*

Every year, 30 million jobs are destroyed in the United States. Businesses go bust, companies downsize, factories automate. Some workers get pink slips; others retire and aren’t replaced. In a good year, however, the economy creates 2 million more jobs than it consumes.There are no official data on the number of jobs sent offshore by U.S. companies, but some experts estimate the total to be about 300,000 a year. If they’re right, the practice accounts for 1% of job loss in the U.S.

So why the fuss? Because the last three years haven’t been good ones, leaving the economy 2 million jobs in the hole. And for the first time, it’s not just blue-collar jobs that are being shipped abroad. Analysts estimate that as many as 14 million white-collar jobs are vulnerable.

The potential casualty list includes clerical workers, administrators, programmers, analysts, accountants, auditors, telemarketers, researchers, tax preparers, technical writers and even economists. In only a few years, this displacement of jobs has created a new class of anxious -- even angry -- Americans.

Every morning, as he signs on to his computer before sunup, Vashistha hears some of their voices.

“Mr. Chairman, you had better go back to Harvard and take a course in making people believe you are not really stupid,” read one recent e-mail. “If you think exporting jobs is such a good idea, why don’t you export yourself and others like you?”

“You are lining your pockets with the money taken from American workers,” seethed another. “I hope some day you have as hard a time finding a job as I have in the last three years.”

At neoIT’s Bay Area headquarters, located in a high-tech office park where cattle once grazed, the atmosphere is relaxed but the energy level is high. The pace is set by Vashistha, a trim fitness buff who dresses California casual while in San Ramon but dons a suit and tie on East Coast treks.

Vashistha starts each day with a 5 a.m. gym workout, then heads to the office for an early round of global telephone tag with neoIT managers and investors in New York; Amsterdam; Bangalore, India; and Manila. For other senior staff, a typical workday starts at 6 a.m. and ends 18 hours later, with a three-hour family break at 6 p.m. The marathon schedule makes it easier to coordinate activities on opposite sides of the globe.

“The kids go to bed at 9 p.m., and we do the rest of our work between 9 and midnight,” says Managing Director Debashish Sinha. “You get used to it.”

The staff is expected to stay up to date on business trends. Vashistha gives periodic reading assignments, and at meetings he asks his managers to discuss the books they have read. Recent selections have included such stem-winders as “Developing Knowledge-Based Client Relationships” and “Built to Last: Successful Habits of Visionary Companies.”

Vashistha’s company occupies a narrow but growing niche. For a fee, it helps bigger companies devise a strategy for moving jobs overseas, identify firms that can supply the foreign labor and oversee the work for several years. Vashistha says his 16 clients stand to save a combined total of $500 million over five years.

He declines to reveal neoIT’s current client list, but previous customers have included heavyweights such as BellSouth, HCA, Lucent Technologies, Procter & Gamble, Sprint, Visa, Chevron and Texaco.

There are bigger consultants in the field, but Merrill Lynch has rated neoIT as the most aggressive in America. Vashistha says his clients account for about 5% of the $20 billion spent by corporations each year to move jobs overseas, including the cost of the new foreign payrolls.

Vashistha has even higher ambitions. His game plan is to carve out a quarter of the entire pie.

The opportunity for growth is certainly there. Many companies are under intense pressure to cut costs, and a computer programmer who earns $75,000 a year in the United States can easily be replaced by one earning less than a third that amount in India. Even when other costs are added to the equation, companies typically save as much as 40% by shifting work overseas, analysts say.

While the recent political backlash has caused some companies to delay such plans, Vashistha says the trend is unstoppable. If U.S. firms were forced to stop, he says, they would quickly lose ground to rivals who have no qualms about hiring foreigners.

Vashistha’s position reflects the thinking of many mainstream economists. A firm that hires a $20,000-a-year Indian programmer instead of an $80,000-a-year American is behaving no differently than a company that installs an assembly-line robot to replace several human beings. In both cases, profits and productivity improve.

The higher efficiency allows Americans to pay less for goods and services, they say, and living standards rise. In developing countries, the infusion of jobs allows the middle class to expand and buy more U.S. exports. American companies invest the profits in more innovative enterprises, generating new jobs for American workers. (Whether the new jobs pay as well as the old ones is a subject of considerable debate.)

Vashistha’s faith was put to the test recently when he defended his work to Lou Dobbs, the CNN anchor who has been conducting a nightly assault on outsourcing in a series called “Exporting America”:

Vashistha: “We can’t just put up our borders and imagine that these jobs will stay. In fact, companies are going bankrupt because they are not taking advantage of these lower co-markets....”

Dobbs: “So what you end up [with] is a race to the bottom.... This is the wholesale exportation of American wealth.... “

Vashistha: “What is happening today is, I think, this is the next evolution in the global economy.”

Dobbs: “That’s wonderful. Great evolution, if you believe that the United States should be shipping its wealth, its jobs, standard of living and quality of life to Third World countries where there are no regulations for environment, no regulations for labor, no standards that is a requirement here in this country.”

Vashistha says that more needs to be done to help the casualties of globalization. He said neoIT has begun making the case for better severance packages, outplacement services, retraining programs and government aid. “Should that have been done a year ago, two years ago? Absolutely,” he says. “But I don’t think anybody was thinking that far ahead.”

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Vashistha was born in 1965, the third of four sons of a corporate executive who moved from city to city on behalf of a large Indian fertilizer company. The family belonged to India’s upper class, but Vashistha set his sights even higher.

“Atul was the person who had really high expectations and wanted things even if they were beyond his means,” said eldest brother Avinash, 42, who runs the Indian end of neoIT’s operations in Bangalore.

Vashistha was the most independent of four brothers, and the most magnetic, attracting a circle of friends and admirers.

“If 10 people meet you and say hello to you, the next day you’re going to call him, not those other nine people. He had that power in him,” said younger brother Ashish, 37, a laparoscopic surgeon in Lucknow, India.

Vashistha excelled in school, sports and socializing. He was captain of the cricket team. He violated cultural mores by dating women in college.

He received a degree in metallurgical engineering from the Indian Institute of Technology at Banaras, but soon lost interest in smelting. “I realized very quickly I could not have a career in iron and steel if I wanted to move up,” he said.

It was time to retool. Instead of honoring his father’s wishes to stay in India and prepare for a career in civil service, Vashistha shipped out to the United States in 1988 to pursue an MBA at Arizona State University.

“Growing up in India, I felt like I was too bound by family rules, instead of the spirit of what I wanted to do,” he said. “When I came to the U.S., it took me about two years to realize the immense freedom that you have, especially the freedom to make your own future.”

After moving to America, Vashistha broke his arranged engagement to an Indian woman and eventually married an Australian American accountant he met in Arizona. His family boycotted the wedding, although they have since accepted his wife, Jodie, and 5-year-old daughter, Tia, into the fold.

Vashistha and Avinash launched neoIT in 1999, drawing on India’s growing pool of English-speaking technology graduates and the increasing demand for their talents, particularly during the Y2K reprogramming crunch in the United States. Initially, the firm focused on developing software to help outsourcing companies manage their global supplier networks. As a sideline, it advised firms on how to identify and manage suppliers of offshore labor.

Three years later, neoIT was losing money, and the brothers noticed their clients were more interested in their advice on moving jobs offshore than in the technology they were selling.

It was time to retool again. The company transformed itself into a pure advisory firm. Its staff has grown to 67 employees, 12 in the United States and the rest in Asia. Independent analysts estimate that it took in at least $10 million last year.

Vashistha’s allies insist that advisory firms such as his are not driving the migration of jobs, but are merely helping steer it along a more rational course.

“The trend was there long before Atul got involved,” said Brian Keane, chief executive of Boston-based Keane Inc., a provider of computer services. “What he has done in classic entrepreneurial fashion is recognize an unserved need to provide structure, discipline and education to the process. He’s really just filling a void.”

Critics characterize Vashistha as an enabler, someone who aids, and possibly accelerates, the flight of U.S. jobs.

“It’s scandalous that people buy into this,” said Richard Armstrong, an unemployed software engineer in Denver. “There’s a long list of people who want to jump in and make money off this. They give that warm, fuzzy feeling to companies. They hold conferences, and cheer each other on for saving some money.”

Vashistha says he wishes he could bring his critics around. But just as some deals cannot be closed, some doubters will never be convinced.

During a recent dinner party, Vashistha was challenged by a man who wanted to know how he justified his line of work. He launched into a vigorous defense of globalization, until he learned the man’s father had lost his job.

“The moment I recognized that, I stopped,” he said.