India’s Office Pool

The latest wave reshaping the global economy springs not from Silicon Valley, nor from the canyons of Manhattan, but from offices and warehouses here.

Visit your doctor and there’s a chance your file, dictated over the phone, will be typed up in India and shot back overnight into the physician’s computer.

Miss the monthly payment on your new refrigerator, and the person who calls to bug you may be sitting in an office in New Delhi, 8,000 miles away.

Request a different flight, and your plane ticket, scanned into a computer, may flash on a screen in Bombay, where a young college grad will punch in the change.

As technology obliterates distance in the global marketplace, this impoverished country seems paradoxically poised to seize the latest opportunity like no other. Full of English-speaking university graduates desperate for work, India is rapidly becoming a magnet for service jobs ranging from the mundane to the cutting-edge. Most of these jobs--from data processing to high-end engineering--are tied to U.S. and European companies, which are setting up offices across the country at a rapid rate.

Indian business and government leaders, meanwhile, are eagerly clearing the way, in an embrace of Western service companies that marks a departure from the country’s historical attitude toward foreign capitalists. After independence in 1947, Indian governments largely shunned Western investors in favor of socialist and protectionist policies more closely resembling the Soviets’ old model. As a result, India stood by in the 1970s and ‘80s as East Asia boomed by transforming itself into a manufacturing platform for the West.

India is determined to catch the next wave. Spurred by the success of the country’s world-class software industry--a booming $5-billion-a-year business--Indian officials and entrepreneurs are making extraordinary efforts to invite Western companies to bring their office jobs here.

“This industry could be the biggest thing that’s ever happened to this country,” said Jagdish Moorjani, who employs 150 people out of his parents’ old textile mill in Bombay to answer Internet queries for a large American bank. “The cost of manpower is so much cheaper, the quality of service so high, that no U.S. company will be able to stay away.”

More often than not, the product being dealt with is information: U.S. firms send it via satellite, and Indian workers key it into files, categorize it, analyze it and ship it back. But Western companies are also increasingly hiring Indians to do skilled jobs such as engineering--and for a fraction of the cost back home.

“I’ve recommended this job to all my friends,” said Dilip James, a 23-year-old graduate of one of India’s best universities who earns $60 a week transcribing medical files for doctors in California and elsewhere in the U.S. “Every day I learn something new.”

San Francisco-based Bechtel Group employs 400 engineers in a state-of-the-art office outside New Delhi that handles projects from all over the world. Ford employs accountants to work for its Asian outlets. Pfizer, the pharmaceutical giant, is in India conducting trials for drugs to treat cancer, infectious diseases and mental illness.

Many Companies Planning to Expand

British Airways beams a scanned copy of every one of the 35 million tickets it sells each year to India, where workers reconcile the tickets with billing information sent from travel agents. At Decision Support International, workers key in U.S. documents as varied as Yellow Pages and annual reports for American clients. In New Delhi, General Electric employs more than 1,000 people to process loans, perform accounting tasks and call people in the U.S. who are late on their loan payments.

Many of the U.S. companies already in India, including American Express, which employs 650 accountants and data processors in New Delhi, are planning to expand. GE intends to quadruple the size of its operations in the next two years. Ford is considering enlarging in order to handle the accounting for its European and American operations as well.

“You’d never know we are 10,000 miles away from the home office,” said Nimish Soni, who supervises 120 employees in Bangalore to process insurance claims for Cincinnati’s American Annuity Group. “I could take this operation anywhere in the world. It’s completely portable.”

India is not alone in tapping an educated, English-speaking population to serve as the “back office” staff for foreign companies. Ireland, which for decades has been a European base for U.S. and Japanese companies, offers computing, accounting and clerical services to international companies. The Philippines and Jamaica also are home to such operations.

In a recent study, consulting firm McKinsey & Co. predicted enormous growth in the globalization of services. About 40,000 Indians are now working in the so-called remote-service industry. McKinsey predicted that the industry will grow at a 50% annual rate in India and employ as many as 700,000 people here by 2008. McKinsey’s consultants identified an array of tasks that Western companies could send here: engineering, accounting, data processing, transcription, customer service jobs and others.

“There is no reason some guy in the U.S. should be sitting in a warehouse key-punching data for $25 an hour when you can pay someone here to do it for much less,” said Pramat Sinha, a McKinsey consultant in New Delhi. “We can do it here and ship it back overnight.”

New York-based McKinsey, the world’s largest management consulting firm, offers a good example itself: In New Delhi, the firm operates a research center staffed by librarians and computer experts who serve the company’s offices 24 hours a day. In the southeastern Indian city of Madras, McKinsey maintains a round-the-clock graphic arts center that its consultants tap from around the globe.

With unemployment in the U.S. at near-historic lows, the exporting of service-sector jobs has so far produced little American domestic opposition. Still, some of the big companies with operations in India are reluctant to advertise their presence here. Executives with GE, citing negotiations with their U.S. unions, refused to discuss the firm’s enterprises here. An executive with Ford Business Service Center in Madras said he wanted to keep his company’s operations a secret from its rivals.

“This is a competitive advantage that I don’t want to talk about,” said John Wood, who heads Ford’s service office in Madras.

The rapid success of the remote-service industry in India is best illustrated by the example of HealthScribe Inc., a Virginia-based company that transcribes physicians’ dictation. Medical transcription is a large and competitive business in the U.S., employing about 350,000 people. HealthScribe has 350 transcriptionists in the U.S.

In 1996, HealthScribe opened an office with 10 people in Bangalore, the hub of India’s booming software industry. The idea was to transmit the voice recordings of doctors via satellite directly to India, where workers would type up the information and send it back, also via satellite.

The company was stunned at its own success: Today, HealthScribe’s India office employs 450 people, is expanding at a rate of 15 employees a month and occupies a new office building in Bangalore. The transcribers work in three shifts, around the clock, churning out 150,000 lines of medical files a day. The Bangalore office now handles a third of HealthScribe’s U.S. work.

“We are absolutely happy with what we’ve done in India,” said Marty Huebschman, HealthScribe’s chief operating officer.

Whereas a typical medical transcriber earns about $30,000 a year in the U.S., most of the workers in HealthScribe’s Bangalore office earn a fraction of that--about $75 a week. The demand for such jobs is so great in India that HealthScribe has its pick of employees: Despite the assembly-line nature of the work, all workers at HealthScribe India’s office boast college degrees.

“Everyone in this office has a college degree--except me,” said Roy Marshall, the British director of World Network Services, which employs 1,200 workers in Bombay and Pune to process data for British Airways. The work is tedious, but many members of Marshall’s staff hold master’s degrees, and many speak three or four languages.

Marshall came to India four years ago with a mandate to help British Airways cut costs. The workers in India handle a range of tasks, from rescheduling passengers who have missed flight connections to making sure BA’s frequent fliers get credit for their trips. Marshall figures the Indian subsidiary is saving British Airways as much as $25 million a year--and it now handles ticketing work for nine other airlines.

“There was a lot of skepticism among the middle managers back home about whether this would work in India,” Marshall said. “But now they wouldn’t have it any other way.”

At HealthScribe, as at many service companies here, the time difference helps: When, say, a doctor is asleep in the U.S., it’s daytime in India, where the transcribers can usually turn a file around in a few hours. When the doctor arrives at work the next morning, the file is often waiting in his or her office computer.

The biggest hurdle Western companies face in India is electricity--many urban centers here lose power several times a day, often for hours at a stretch. Most companies employ backup generators.

The other major hurdle is American culture. At HealthScribe, part of the training involves getting the transcribers comfortable with American accents. At Selectronic, a medical transcription service in New Delhi, dictionaries of American slang are scattered about the office. As part of their training, Selectronic’s workers watch screenings of such TV shows as “ER” and “Chicago Hope.”

In a country with a tradition of guaranteed employment, some U.S. companies offer perks unheard of back home. HealthScribe workers, for instance, are ferried to and from work by bus and given a hot lunch at no charge.

Round-the-Clock Work Is Made Possible

The service industry here is also performing more and more highly skilled work such as drug testing and engineering. The 400 engineers at Bechtel’s New Delhi office often work on projects with other company engineers around the world. The key is the live, three-dimensional computer model: After a Bechtel engineer in the U.S. finishes working on a power plant design and goes home for the night, his counterpart in New Delhi, just arriving at the office, can pick up where he left off.

“When they’re sleeping, we’re working,” said Laxman Odedra, Bechtel’s engineering manager in New Delhi. “This makes us a 24-hour operation.”

The big difference is cost. In New Delhi, the starting salary of a Bechtel engineer is about $4,000 a year.

On top of everything else, the links between offices in India and the U.S. are creating new relationships that go beyond global economics. Anita Kartnik processes insurance claims in an office in Bangalore for American Annuity Group. Tacked up in her cubicle are the family photos of a co-worker in the U.S. with whom she communicates each day by e-mail. Kartnik, however, has never been to Cincinnati, and she has never even spoken to her friend.

“I know everything about her,” Kartnik said with a smile. “I never knew the world was such a small place.”