North Jersey News Series - Part 1
North Jersey News Series - Part 1
Date: Wednesday, October 20, 2004 5:41 PM
JOB DESTRUCTION NEWSLETTER
October 20, 2004. No. 1113
North Jersey Media group is running series on outsourcing and
insourcing that is one of the best I have ever read. Hugh Morely and
his team did a tremendous job of research, and unlike most of this
genre of news articles, a direct connection is made between outsourcing
and nonimmigrant visas. Many instances American workers training their
replacements are mentioned, and how those jobs eventually move offshore
once the foreigner gets the skills and/or knowledge.
The website requires you to signup in order to read the articles. The
articles are too long to put into one newsletter so I will send out
several parts. There aren't many pictures on the website, so it might
be worthwhile to pick up a copy of the newspapers. If there are good
pictures and graphics, I would appreciate if someone in the New Jersey
area mailed me copies.
I hope some of you contact this newspaper to compliment them on this
excellent series.
For questions or comments related to content on the site, please
contact Lisa Crouch - Managing Editor of NorthJersey.com
- by phone at 201-646-4577
- by e-mail at crouch@northjersey.com
Journalist:
HUGH R. MORLEY
morley@northjersey.com
THE SERIES AT A GLANCE
Today: The relative trickle of American tech jobs to India appears to
be only the beginning.
Monday: Profiles of five workers - two American, three Indian - whose
lives have been profoundly affected by offshoring.
Tuesday: Welcome to Bangalore, city of dreams, and eye of the
offshoring storm.
Wednesday: Promising lucrative jobs and a brighter future for young
Indians, offshoring also has brought great stress to the traditional
Indian way of life.
Thursday: The pieces are in place for explosive growth of the Indian
pharmaceutical industry, potentially making it the next frontier for
offshoring - with implications for New Jersey.
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Offshore storm
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Our pain, their gain
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Offshore storm
Sunday, October 17, 2004
By HUGH R. MORLEY
BANGALORE, India - A head trauma victim nervouslye sure, India is not
the only player in offshoring, as Russia, Ireland, China, Poland, the
Philippines and South Africa are also in the game. But India has
considerable assets that move it to the head of the class, most notably
a large, well-educated and English-speaking workforce that's accustomed
to lesults of X-rays taken at a hospital in Boston; the images are
processed for analysis 8,000 miles away, in this distant Indian
boomtown.
A mortgage applicant lusts after a house in North Jersey; the analysts
who will determine whether he gets a loan crunch the numbers in
Kolkata, formerly Calcutta.
Financial disclosure documents for a Wall Street bank are scrutinized
by an eagle-eyed team of copy editors in Chennai, a city on the Bay of
Bengal.
OFFSHORING
Where are white-collar jobs going, the good-paying kind? To India. It's
called offshoring. It's a revolution that rocked the American IT
sector, and New Jersey's pharmaceutical industry could be next.
PROJECT TEAM
The Record sent Staff Writer Hugh Morley and Senior Photographer
Carmine Galasso to India for two weeks, to report firsthand on the
movement of American jobs to the country.
Morley is an award-winning general assignment business reporter who has
been honored for his reporting on New Jersey's loss of manufacturing
jobs.
Galasso has won more than 100 awards for his photographs, which have
been published worldwide in major foreign and domestic magazines.
The Record would like to thank staff members of the Times of India for
their support and assistance in this project.
These are snapshots of a quiet exodus, a movement not of people but of
their jobs to places where the work can be done much more cheaply. It's
a movement powered by inexorable economic forces and accelerated by the
latest in information technology.
It's already hit the American IT sector hard, and now the
pharmaceutical industry - a foundation stone of the economy of New
Jersey - is within its sights.
Businessmen and politicians refer to it as outsourcing or offshoring,
sometimes even offshore outsourcing. But by any name, the bottom line
is clear: The same economics that devastated the industrial sector in
the United States is now reaching higher up the food chain, to the
white-collar and professional jobs that are the backbone of the
American middle class.
For many SUV-driving paper-pushers or software engineers living in
North Jersey, there are countless counterparts in India, willing and
able to do the same work for a fraction of the cost.
Thus far, the trend has been limited, affecting mostly data-processing
and back-office functions of U.S. corporations. But smart people are
betting big money that American business leaders will be sending more
types of well-paying work overseas.
Nandan Nilekani is the CEO of Infosys Technologies, one of the big
players in Indian offshoring. He and his $1 billion-a-year company have
gotten wealthy doing computer work under contract for corporations from
America and other well-off countries.
He sees no limit for his industry. "Everything you can send down a wire
is up for grabs," he told a session convened to discuss outsourcing at
the World Economic Forum in Switzerland earlier this year.
The exodus has already sparked bitter debate in the United States about
what's being done to protect American jobs, debate that has spilled
over into the presidential campaign. In New Jersey, Governor McGreevey
on Sept. 10 signed an executive order that keeps contractors from
performing state government work overseas.
In India, too, there is controversy. A booming economy propelled in
part by offshoring is butting up against a traditionalist culture. But
those involved in the boom don't have much time for soul-searching.
Indian companies - and U.S. firms with operations there - are building
new sites, expanding their workforce, and adding items to the menu of
tasks that can be shipped overseas.
That dynamic is evident in cities like Bangalore and Chennai, once
known as Madras, where the signs of change mix freely with emblems of
the old India. Construction work crews are everywhere, as the influx
from across the country of cellphone-toting offshore workers sparks a
building frenzy of new homes, offices and highways. Along the same
traffic-choked streets, cows wander freely and sari-clad women go about
daily routines that haven't changed in generations.
Indian business leaders see the surge as the leading edge of an
economic boom that will lift the impoverished nation of 1.1 billion
people from despair to prosperity. Though offshoring accounts for only
1 million or so jobs, many feel its success will jump-start a global
demand for Indian goods - drugs, cars, biotechnology and textiles.
To be sure, India is not the only player in offshoring, as Russia,
Ireland, China, Poland, the Philippines and South Africa are also in
the game. But India has considerable assets that move it to the head of
the class, most notably a large, well-educated and English-speaking
workforce that's accustomed to low wages.
How low? A computer programmer in India makes about $8,000, compared to
$70,000 in the United States. An accountant? About $4,000 in India, vs.
$62,000 in the States. And pharmacists? - $3,000 or so, compared with
$77,000.
This year alone, the Indian IT industry will grow by 30 percent to
revenues of about $12.5 billion, says the leading Indian outsourcing
business group. And that growth is expected to continue as the
companies look to expand beyond the current mainstays of outsourcing -
programming and call centers, where armies of Indian technicians field
service calls from frustrated computer users around the world.
Next on the list, they say, are tasks that require creativity, decision
making and analysis.
"Given the billion-plus population we have, I don't think there is
going to be any constraint on capacity to handle any amount of work,"
said R. Chandrasekaran, the managing director of Cognizant Technology
Solutions, during an interview on a recent morning at the company's
stylish orange, gray and blue Indian complex in Chennai.
The Teaneck-based company, which provides IT services under contract,
is one of the largest U.S.-based outsourcing companies. Its annual
revenue - $565 million this year - has grown by 146 percent since 2002.
"There is still a lot more that we can do," Chandrasekaran said. "So at
least for the next five to 10 years, this industry will really grow."
Indian offshore executives envision a future in which their countrymen
design entire software packages, do computer-assisted engineering
design and provide financial analysis for U.S. customers.
The pharmaceutical sector is especially notable on the list of Indian
industries looking to follow IT's lead. Its counterpart in New Jersey
is a big player in the state economy.
Indian industry executives - and some from America - believe that
India's low-wage, high-skilled workers can help cut the cost of
providing drugs to the United States by helping research, manufacture
and even sell them. Some cite savings of as much as 50 percent.
"The IT industry took 25 years to get acceptance, to get recognition,"
said K.R. Ravishankar, CEO of Strides Arcolab Ltd., a Bangalore-based
generic drug manufacturer with a plant in Somerset, N.J. "The pharma
industry is going to take much less - primarily because there is a lot
more awareness of what is happening today than there was in the 1980s."
Western pharmaceutical companies with a big presence in New Jersey also
see savings in India.
"India is potentially a good place to do our R&D work," said Pfizer
Vice President Marjory Searing, noting that drug development is the
$45.1 billion company's biggest expense.
Although outsourcing is still an exception rather than the rule in
pharmaceuticals, the implications of a repeat of the IT experience
would be significant for this state, if not the nation.
Seven of the world's 10 largest drug companies have a strong presence
in New Jersey. And the industry employs 63,000 here, with a combined
payroll of $6 billion in 2003.
Supporters cite efficiency, low prices
Proponents of offshoring say it helps U.S. companies boost efficiency,
cut costs and pass on the benefits to customers through lower prices.
That's much the same argument that Wal-Mart makes for buying its
low-priced goods abroad.
Any strategy that reduces costs and uses resources more productively
"ultimately results in more output, higher income and more employment,"
said Joseph Seneca, an economics professor at Rutgers University.
He and other global trade backers argue that world competition boosts
the standard of living in emerging economies like India to the point
where they become serious consumers of U.S. exports. Indeed, offshore
workers in India are already living better than the general population.
And they proudly note that they work on Dell computers, eat Domino's
pizza and wear Tommy Hilfiger.
Opponents, in turn, say offshoring has lengthened U.S. unemployment
lines and weakened the nation's economy and its technical and
production capacity.
Marcus Courtney, president of WashTech, a group that has led the
Communications Workers of America campaign to protect IT jobs,
dismissed suggestions that benefits come to anyone but the
corporations.
"The fact is that the more jobs are opened up to direct competition
with low-wage workers overseas, the more it drives down wages for U.S.
workers," he said.
Hard numbers of lost jobs in the United States are not easy to come by.
Companies usually don't reveal details when they ship jobs abroad, and
many forbid displaced employees to discuss company business, often
inserting the prohibition in severance agreements. Indian businessmen,
in turn, refuse to divulge whom they work for, saying they are sworn to
secrecy by their clients.
The best estimates probably lie somewhere in the plethora of
predictions offered by consultants and think tanks.
Forrester Research of Cambridge, Mass., estimated that 3.3 million jobs
will go abroad by 2015. And Gartner Inc. of Stamford, Conn., has said
one in 10 U.S. IT jobs may eventually move out of the country. Deloitte
Research, a global consultant, has estimated that 2 million
financial-services jobs alone will go offshore in the next five years.
More locally, the New Jersey Policy Perspective, a think tank that
researches and analyzes issues facing the Garden State, in July
estimated that one in eight jobs in the state - about 492,000 - have
"the potential" to go abroad. With office, computer and math-based jobs
most endangered, the report found the average salary of at-risk jobs
was $47,000.
Then again, some economists note that even the worst predictions show
only a tiny fraction of America's 132 million jobs going abroad. They
suggest that, even as the ranks of the outsourced grow, the U.S.
economy is adding plenty of replacement positions.
No matter what the overall number of lost jobs, it's clear that workers
in New Jersey have been touched by the offshoring wave.
Unilever, the household goods company, this year laid off 120 workers
after signing an outsourcing contract with IBM. Employees said 40
clerical workers in Englewood Cliffs were among the displaced
employees, and some but not all of their jobs went to India, adding
that they had sat alongside and trained their Indian replacements.
Unilever declined to talk about specifics but said the move had been
made to "enable the company to better focus resources on its strategic
financial thrusts by lowering the overall cost and resources dedicated
to finance processes while improving flexibility and quality of service
and information."
Pearson Technology, part of the Pearson global media group, hired
Edison-based offshore company Intelligroup to help run its computers in
Old Tappan. Employees say that about 45 people were laid off in July as
a result of the move. Pearson released a statement saying that, "while
some jobs moved from the U.S. to India," the company expected a net
creation of U.S. jobs in the long term.
Employees at the Bank of New York's West Paterson office said the
company laid off about 90 IT workers there in March, telling them the
work would be done in Chennai. In its annual report released in March,
the company said it would move 250 jobs to India, in a companywide
effort to move work to low-wage areas, including upstate New York and
Florida. A spokesman, Kevin Heine, said the majority of the job shifts
were from one part of the U.S. to another.
Programmers who worked on customer billing for AT&T in Piscataway were
outsourced to IBM, which, in turn, laid them off in 2003 when the work
was shifted to India and Canada, employees said. IBM said it could not
comment on specific cases, but noted that some of its clients require
"global, 24/7 delivery capability."
A career of 20 years is left in ruins
The swift, sharp destruction of their careers has stunned workers.
Herb Starr, 50, had worked in the IT industry for 20 years when he was
laid off by Computer Science Corp. at its Somerset office in May 2003.
Starr says that, before being let go, he had to train his Indian
replacement. A spokesman for CSC said the staff decision involving
Starr and the others "was not directly related to any movement of work
to India."
At the time, Starr was a $90,000-a-year software testing manager. Since
then, he has sent out 100 risumis, with little response. Still
unemployed, he and his wife, Cheryl, and their sons Adam and Jeffrey,
12 and 14, have steadily eaten through his savings.
"I can understand what the companies are trying to do," the Parsippany
resident said. "They're trying to save money. ... But unfortunately,
it's hurting American workers."
More than 8,000 miles away, it's not all gravy either. Indian IT
companies get thousands of applicants for each job, in part because of
the chronic shortage of positions. Some students buckle under the
frenzied competition and pressure to get good enough grades to get
hired.
Others - elite management, engineering and IT graduates - find the
world is their oyster, as companies ferociously compete to hire top
performers from the best colleges.
Guarav Sharma, 21, is a rookie programmer who joined Cognizant just a
few weeks after he got a degree in mechanical engineering from a good
college in July. Such jobs typically pay $5,000 a year.
Cognizant's offer to Sharma came at a job fair held at his college over
several days - a common occurrence at most good schools in India.
"I wanted to join a company that provides me opportunities and growth,"
Sharma said. "In a software company, you get an opportunity to explore
more and use your creativity."
A few miles away, Dr. Vasanthi, 40, has also found fulfillment in
offshoring.
She oversees about 30 workers - mainly women - doing medical billing
for Allserve Systems Ltd., a British company with its U.S. headquarters
in North Brunswick. With a salary of about $2,000 a month, Vasanthi
said she earns four times as much as she did as a doctor at her
one-person clinic.
"There are plenty of doctors here" in India, explained Vasanthi,
dressed in an orange-and-pink sari. "The patients are not like U.S.
patients. You have middle-class and lower-class patients, and you can't
expect very good revenue from them."
The fruits of all this frenetic job creation are evident from the
construction boom in southern India.
On a recent morning, as Cognizant officials took a reporter on a guided
tour, the company's carefully landscaped, futuristic site bustled with
activity. Within the compound, it could have been an office in North
Jersey.
But outside the gates, ox-drawn wagons laden with scaffolding trundle
down a road lined with wooden shacks and stores selling soap sachets,
Indian sweet desserts, snacks and sodas. Just beyond the perimeter
wall, a disgruntled man dressed in nothing but a dirty loincloth
complained that his family couldn't find work.
At the rear of the site, on a flat green plain that sits above the Bay
of Bengal, Cognizant is preparing to double the size of the offices.
The new building will add enough space to boost the workforce there
from 4,000 to 8,000, part of a companywide expansion that could put the
Cognizant payroll at 14,000 by the end of 2005.
In Bangalore, 200 miles away, Wipro - one of India's largest IT
offshore companies - is building offices that will nearly double the
size of its sprawling 8,000-person, 46-acre campus.
This year alone, according to Indian press reports, U.S. companies such
as Accenture, Convergys, Oracle, Unisys, JP Morgan and Dell have
undertaken hiring sprees in India that will add more than 20,000 jobs
on the subcontinent.
India-based workers now process insurance claims, file tax forms, bill
insurance companies for medical procedures done in the United States,
and process and manage credit-card accounts.
Beyond economics, businessmen say an added benefit to offshoring can be
the time difference between India and the United States' East Coast -
9= hours. Work can be done in India when American employees go home,
ready to be picked up again when they come in the next morning.
Offshoring jobs: Where will it all end?
In part, the latest trend in offshoring was powered by technological
advance. Undersea fiber optic cables all but eliminated distance as a
factor in the cost accounting of getting work done by distant workers.
Over the last few years, that cost has dropped even further thanks to a
glut in cable capacity.
And the trend has quickened, going beyond IT and back-office work to
encompass pretty much anything that can be done with a computer or a
phone.
It is this rampant expansion that worries people most, said Seneca, the
Rutgers professor. Given that service jobs now account for 80 percent
of all U.S. positions, he said, people feel threatened by "the
potential that areas of our economy that were formerly immune to global
competition are now exposed."
In Bangalore, doctors employed by Wipro visually enhance and analyze
X-rays and CAT scans of patients awaiting surgery at hospitals in the
United States, company officials said. Using the X-ray, the doctors
suggest a preliminary diagnosis and give it to the hospital, which
makes its own - final - diagnosis, said T.K. Kurien, the chief
executive of Wipro's health care business.
A spokeswoman for Massachusetts General Hospital in Boston said Wipro's
role there is limited to processing X-rays during non-business hours.
The company - which has an office in Piscataway - has also studied the
possibility of conducting offshore pathology tests, such as
computer-assisted data analysis for blood tests taken by U.S. doctors,
he said.
In Bangalore, Allserve Systems Ltd. has 100 engineers who do
computer-assisted design work for American and European automobile and
aerospace companies, company officials said.
OfficeTiger, a Chennai-based company started by three Princeton
graduates, is doing legal research and document editing in India for
U.S. attorneys under a joint venture with the Somerset office of
Hildebrandt International, a consultant to law firms.
With 2,000 employees, OfficeTiger operates out of a tightly secure
office three floors above the city's biggest mall and six floors above
the sweaty chaos of downtown Chennai. There, employees prepare
Powerpoint reports for U.S. investment banks, execute financial
research for merger and acquisition moves, and even do financial
modeling and analysis, company officials say.
On a recent afternoon, two young graduates stared intently at a
computer screen. Under a four-hour deadline, they reproduced the label
illustration on a tin of California peaches for use on a U.S. company's
Web site.
Down the hall, a cell of five employees - a reader, two editors, a
paginator and a quality-control checker - were proofreading and
formatting a financial report to be printed for a U.S.-based client.
The group is among more than 540 people in the company's 24-hour-a-day
electronic-pre-press department, which, among other tasks, puts
financial reports in the format required by the Securities and Exchange
Commission.
As they worked, a sign on a desk reminded two young men in clean,
stiff-collared shirts of the demands of Wall Street: "Never ever make
sloppy errors."
"We are preparing documents that go directly into print," said Lonnie
F. Sapp, the company's strapping chief operating officer, a former
semipro football player from Florida. His cousin is Warren Sapp,
defensive tackle for the Oakland Raiders. With considerable experience
in publishing, Lonnie Sapp was recruited in America to run
OfficeTiger's Indian operation.
"If we miss a zero or add a zero, it could move the stock price and
cause catastrophic damage," Sapp said as he looked out over rows of
young workers. "So it's got to be 100 percent."
IT companies, too, are looking to broaden their horizons. Cognizant,
for instance, wants to build on successes in programming for clinical
drug trials and start analyzing the data from the trials, said company
Vice President Mohan Narayanan .S. In the same way, the company wants
to move on beyond programming software for insurance companies, to such
high-end processes as claims adjudication, he said.
Polaris Software Lab Ltd, which has its U.S. headquarters in the Iselin
section of Woodbridge, is looking to build on nearly 15 years of
working with Citigroup.
The banking giant was among the first to set up operations in India in
the mid-1980s. And since the early 1990s, Polaris has provided IT
services to Citigroup under contract, said Arun Jain, Polaris' CEO.
In 2002, Polaris bought a Citigroup software-development subsidiary and
is now selling its own software - Intellect Suite.
Jain estimates that the company has shifted about 1,500 U.S.-based jobs
to India, including some in New York. Aside from Citigroup, Polaris
customers include AIG and Johnson & Johnson. The company has just
signed on to work for Commerce Bank, though that work will be done in
the United States, Jain said.
He likened his company's learning curve - and that of the industry - to
the Japanese advance in the car industry.
"It's the same as the automobile model," said Jain. "Initially Japan
was outsourcing from America. And later on they produced a car which is
better than American cars."
He dismissed the suggestion that offshoring harms the United States.
"Whenever these things happened, America has bounced back with a
stronger value proposition. ... Before it was only Ford and GM driving
the market. As soon as Toyota and Honda came in, the whole market
scenario changed and the consumer benefited."
India's commitment to education
The foundation for India's IT strength - and its rise as an offshoring
destination - lies in the country's commitment to education and the
English language, a legacy of the colonial days under British rule.
Having English as a second language may have been something that just
happened to India, but the educational commitment reflects the
far-sighted thinking of post-independence Indian leaders, such as
Jawaharlal Nehru, India's first prime minister. In the late 1940s, his
government created a series of institutes and engineering colleges
aimed at pumping out technical students of the highest caliber, using
America's MIT as a model.
That gave the country its technical know-how. By the mid-1980s,
companies like Citibank, Texas Instruments and Hewlett-Packard set up
software development sites in India to take advantage of Indian
engineering skills.
So the country was primed to respond to the demand for IT workers
generated by the dot.com boom and Y2K. India sent tens of thousands of
workers to countries like the United States, where Indian-owned global
employment agencies - termed "bodyshops" - found them work. Typically,
they did the same jobs as American IT workers, but for less money.
Even today, Indian workers in the United States are a key element of
the work done by offshoring companies. Polaris officials, for example,
say that about 80 percent of their 420 employees in the U.S. are on
specialty work visas.
In 2002, India received a third of the 197,537 visas issued by the U.S.
government under the H-1B program, the most commonly used work-permit
option. That's more than double any other country. Of India's visas, 73
percent were for workers in the computer field.
But with the growing expansion of telecommunication links around the
world in the late 1990s, a new operating model emerged: instead of
sending the workers to the work, companies could send the work to the
workers.
GLOSSARY
Outsourcing - when a company contracts with an outside vendor to
perform tasks once done by its own employees.
Offshore outsourcing - when a company contracts with a vendor in a
foreign country to perform tasks formerly done by its own employees.
Offshoring - like offshore outsourcing, except that the term also
applies when a company moves the work to a foreign location where
another group of its own employees performs the task.
Body-shopping - the practice of placing foreign workers in American
companies, where they perform tasks alongside American workers, often
for less pay.
IT - Information Technology; the development, installation and
implementation of computer designs and applications.
Email: morley@northjersey.com
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Our pain, their gain
Monday, October 18, 2004
By HUGH R. MORLEY
CARMINE GALASSO / THE RECORD
As a boy, Santosh Kumar figured he'd follow in his father's footsteps.
For 22 years, his father worked at one of India's deepest, oldest gold
mines, maintaining a water pump at the top of a shaft thousands of feet
deep. There weren't too many alternatives in the South India village of
10,000 people where Kumar grew up.
"We never knew outside that mining town," he said. "Had the mine been
going, I probably would have gone in the mine. That's what people did."
But the 129-year-old mine closed in 2002. And Kumar, 27, is now a
consultant for offshore outsourcing company Polaris Software Lab Ltd.
The ascendance of a mineworker's son to a highly paid job in India's
most glamorous, fastest-growing industry reflects the rapid pace at
which offshore outsourcing is changing life in this populous country.
Kumar and his generation are competing fiercely for lucrative jobs
exported from the United States that will carry them from the mines,
farms and poverty of their youth to the New India.
But for every offshoring success story in Chennai or Bangalore, there
is often a tale of woe in Wayne or Ridgefield Park, where older
American tech workers who also chased the dream of doing better than
their parents face bitter choices and uncertain futures.
The job pays $13,000 a year, a fraction of the U.S. salary
Polaris, a Chennai company with annual revenues of $142 million and
U.S. headquarters in the Iselin section of Woodbridge, N.J., has
provided IT services to companies such as Citigroup, Commerce Bank, AIG
and Johnson & Johnson. It pays Santosh Kumar 50,000 rupees a month, or
about $13,000 a year, to head a team of software developers. That's
many times more than what he would have made in the mine and far more
than the average Indian earns.
But it's less than 25 percent of what the same job would fetch in the
United States.
His success, like that of many of his peers, gave his family fortunes a
dramatic boost. His was the third generation to live in the Kolar Gold
Fields. Both his grandfathers were farmers there, cultivating rice,
sugar cane and silk, and one was also a miner. And because they had so
many children - one had 10 children and the other eight - the two
families struggled constantly, Kumar said.
Kumar's father, Krishna Murthy, 51, forged a slightly better life for
his family. He got a diploma in mechanical engineering, which led to
his job on the surface, instead of in the mine, Kumar said.
The family lived in a two-bedroom, single-story concrete house with a
garden, the property of the mining company, which also owned the town
schools and community center.
As the country advanced slowly, so the family gained some of the
economic milestones of the era - albeit far later than in the West.
They had a television in the mid-1980s and a refrigerator by the end of
that decade. They never owned a car until Kumar recently bought his
parents a Hyundai - a major status symbol in a country where only seven
out of 1,000 people own a car.
As the mine's closing drew near, Kumar's family pointed him toward
college, where his interest in tinkering with radios led him to
technology, and a master's degree.
"IT was the booming industry," he said. "Everybody was going into IT.
From a student's perspective, it was the highest paid industry."
IT offered advancement based on merit, rather than time served.
"It's pretty defined in these old industries," he said. "The more
experience you get, that's when you are promoted. But IT doesn't work
like that. When people see you are capable of managing a team, you are
given the opportunity and the time to deliver."
Kumar has already had one promotion at Polaris, and at the moment he
helps lead a team that works for a Japanese bank.
He shares a two-bedroom apartment in the coastal city of Chennai with
two other IT workers - one for Polaris and the other for iNautix
Technologies, a subsidiary of Bank of New York. They split the rent -
9,500 rupees a month, about $210 and $22 a month for a maid who
cleans and cooks.
Kumar's neighborhood surrounds a tiny village square, where women in
brightly colored saris sell stacks of bananas. On a recent evening the
beating of a drum and the sounds of a wedding rose from a banquet hall
three doors down. Inside Kumar's apartment, books about Bill Gates and
George Harrison and Kumar's passion for classic rock were only the most
obvious signs of Western influence.
"In the last 15 years, Indian culture has changed a lot, which it
hadn't in the last 40 years," Kumar said. "In terms of the standard of
living, the culture, we are getting more Western. That's the mark of a
developing country. We hope it develops soon."
Ridgefield Park man sees job lost to India
Gregory Fernandez felt the impact of India's growing IT skills two
years ago when he returned from a Disney World vacation with his
9-year-old daughter to find his world thrown for a loop.
He had barely walked into the Somerset office complex where he worked
as a programmer for Computer Sciences Corp., when he bumped into a
colleague.
"My friend said, 'Hey, guess what? The second wave of offshoring has
occurred,' " recalled Fernandez, 50, a single-parent father from
Ridgefield Park.
He reacted to the news with a short, sharp expletive.
The same day in July 2002, he was told that by the end of the year he
would lose his $81,000-a-year job. The job would be shifted to India to
cut the cost of providing computer services to AT&T, Fernandez said.
He is still jobless, severed from an industry that had employed his
family for generations: his grandfather, John A. Riener, worked in the
telecom industry, and Fernandez's three brothers still do.
Riener was an inspector for Western Electric, then the manufacturing
arm of AT&T. Fernandez's father was a Navy radio operator during World
War II, went to Fordham on the GI Bill and spent most of his life
selling aircraft parts. By the time he retired, he was vice president
of an aircraft-parts company.
It was a stable upbringing - family fun at Palisades Amusement Park and
Bear Mountain, summer vacations at the Shore -that gave Fernandez the
first tastes of a better life.
"We were the first ones to have air conditioning in the Sixties," he
recalled. "We had a car. We had color TV when it came out in the
1960s."
It didn't take him long to see the value of work. At 9, he was helping
a friend deliver papers. At 11 he had his own route, and while in high
school he worked in a Saddle Brook book warehouse.
After graduating from Ridgefield Park High, Fernandez joined New Jersey
Bell in 1972, installing phones for $3.26 an hour. He spent 10 years
working during the day and going to college at night, earning a
business degree and then an MBA from Fairleigh Dickinson.
In, 1982, he was accepted into the company's computer-training program.
"I saw it as an avenue of advancement," he said. "Something I could do
inside rather than climbing telephone poles in the winter. At 40 or 50
years old, who wants to be doing that?"
He spent the next 20 years as a programmer, leaving the industry
briefly in the mid-1990s, and returning about a year later to take a
job at AT&T. When he did so, Fernandez said, he noticed that many of
the programmers were Indian nationals with U.S. work visas. They earned
about half what he did.
In 2000, his job was transferred to Computer Sciences Corp. And in
November 2001, he was told he had five months to find another job
within the company, because his old one was going to India.
While he conducted the search, Fernandez said, he trained his
successor, a young Indian programmer.
"It was like a kick in the ass," said Fernandez. "Here I've got to
train this guy who is taking my job. It's not a real comfortable
feeling, I'll tell you that."
Though he managed to find a job 10 days before he would have been laid
off, Fernandez luck finally ran out eight months later, when that job
was cut, too.
Computer Sciences Corp. declined to comment, but released a statement
saying: "Any recent job actions within CSC relative to the AT&T account
are not directly related to movement of work to India. CSC, like most
global Fortune 150 companies, strives to work efficiently and
economically for its clients, and provide service delivery from the
most cost-effective source."
Fernandez said that in the last 23 months he has sent out about 400
risumis, had three telephone interviews and one face-to-face
interview.
Now, he is setting up his own Web page design business
(ABD-Enterprise.com), and dabbling in real estate.
He has about $4,000 left of $160,000 in savings, he said. He drives a
1988 Mazda he bought from his brother-in-law for $500.
Neither he nor his daughter has health insurance, he said.
"I never thought I would be in this situation," Fernandez said as he
sat in his Ridgefield Park home. "I guess you can't expect to have a
job for life anymore."
He has given up on a return to IT work - mainly because he sees no
point in retraining to keep up with the fast-changing IT industry.
"Why would I torture myself?" he said. "It's got to the point where I
don't see a future in IT. More and more jobs are going to India. If I
did get a job, how long would it be before that goes to India?"
Even a star glances over his shoulder
Uncertainty dogs Hari Krishna, too, even as his career in the white-hot
IT center of Bangalore takes off like something out of the 1990s
Internet boom.
In seven years, Krishna has had five jobs. He was sought out and hired
as a network engineer by one company - software developer Virtusa of
Boston - after little more than a 15-minute telephone interview, he
said. And his salary has increased tenfold since he joined the
industry.
Yet even as his star rises, Krishna, 31, is wary of the relentless
corporate search for cost-cutting. Echoing his U.S. counterparts, he
dismissed the suggestion that his future is stable.
"It's a very uncertain field," he said. "You can never know - there is
so much competition coming up from China, the Philippines and other
countries, that you don't know when the companies can pick up and move
jobs to China and the Philippines."
These days, Krishna is a senior support analyst for Oracle, the
California-based software company, earning about 50,000 rupees a month,
or $13,000 a year, and supervising eight programmers.
He chose the job partly to give himself exposure to the United States
and its work culture. From Bangalore, he helps maintain the company's
global computer system in Austin, Texas. When the U.S. technicians go
home at night, Krishna and about 38 colleagues - working a day and
evening shift, Bangalore time - keep the massive company's system
running smoothly.
He flew to the company's Austin and San Francisco offices in January
and spent three months learning skills from his American colleagues. He
came back with a cheap DVD player and a flat-screen Panasonic
television that now holds a prominent place in his small, sparsely
furnished living room.
Indeed, for all his relative wealth, he lives a modest existence. He
has no car, preferring to save for the house he and his wife, Kavitha,
25, hope to buy within six months.
Like her husband, Kavitha has worked in offshoring, transcribing
recorded notes from American doctors.
Krishna grew up in Hyderabad, the son of a homemaker and a lawyer who
both instilled in him a serious approach to school.
"Most of the time, we'd study," he said, recalling his college days.
"That's what was taught to us to really have a good future, that there
is nothing in sports and other things. ... The emphasis was on
education."
He graduated in 1997 with a degree in mechanical engineering from one
of India's highly rated institutes of technology. Jobs were scarce in
the auto industry - his first choice - so he focused on IT, which was
starting to boom as corporate America sought software programmers to
solve their Y2K problems.
He spent 35,000 rupees - about $800 - on a computer-training course.
The move changed his life.
Though his IT salary is twice what he'd make in the auto industry,
Krishna said he sometimes yearns for the simpler, more predictable
lifestyle he could have had.
"There is not so much stress in that job," he said. "You go at nine,
come back at five. Forget the work. Here, it's not that way.
Definitely, there is more stress here in IT. You have to upgrade to the
latest technologies and you are basically on-call all the time. Your
job is not 9 to 5, it's not your time."
Husband and wife see their jobs go overseas
Charles Hroch knows about job stress - though for him, it's the stress
of not having a job.
The computer programmer thought he had lucked out when IBM said he
could work from home. No more commutes, he figured. Flexible hours. A
better way to care for his young son.
"I thought it was a good thing," said Hroch, 40.
But it wasn't; it was the first step toward losing his job.
After all, if he could work from Monroe Township on a job in East
Brunswick 10 miles away, why couldn't the work be done by someone
thousands of miles away, someone willing to work for a fraction of what
Hroch made?
In June 2001, Hroch said, he was told that the work he was doing would
move to India.
He managed to find another position within the company, but the
reprieve was short-lived. In June 2003, he learned his new position was
being cut, too. By the fall he was jobless.
By then, however, Hroch knew the routine. Fifteen months earlier, his
wife, Carol, a business analyst for IBM, also had been laid off. She,
too, had worked from home.
Her job went to Canada, she said.
An IBM spokesman declined to discuss "specific client engagements,"
adding that, "it's important to note that most of our clients have
global operations, and require a global, 24/7 delivery capability."
The couple said they knew virtually nothing of offshoring until they
became victims of it.
"I don't think we realized how big of an impact it was - the havoc it
would wreak," said Charles, during a talk at the table in the family's
kitchen. But they would soon find out.
Charles and Carol met in 1995 at AT&T, and fell in love.
Both came from families drawn to the United States by the same yearning
for a better life that attracts many immigrants, including many
Indians.
Carol, 46, a Brooklyn native, is the descendent of Italian immigrants.
Her grandparents, originally from Palermo, went through Ellis Island in
1910. Her father was a foreman in the New York Department of Highways.
Carol joined AT&T in 1981 as a billing representative. In 1994, she
became a billing analyst, tracking customer phone usage through the
company computer.
Charles, the descendent of Irish and Czechoslovakian immigrants, was
born in Rahway. His mother was a gate attendant for Eastern Airlines
and his father was a computer programmer.
Charles studied computer science at Embry Riddle Aeronautical
University in Florida. He joined the ROTC hoping to become a pilot, but
settled for computer programming. In 1990 took a job with AT&T in East
Brunswick, programming software that documented and billed corporate
long-distance calls.
They married in 1996 and had Zachary, now 6. They live in a
2,500-square-foot, four-bedroom colonial with a swimming pool in back.
Three years later, AT&T outsourced the work and the people who did it
to IBM: the Hrochs and their colleagues became employees of Big Blue.
"We were doing the same job, just a different name on the paycheck,"
Carol said. "They said the contract was 10 years. ... So, of course, we
didn't worry about our jobs. We didn't look for other opportunities."
In August 2000, IBM suggested they work from home.
"No difference at all. What you did at work, you did at home," she
said, in a no-nonsense manner. "Virtual officing was a really popular
thing at that time."
Less than two years later, Carol was laid off; Charles' turn came 15
months after that.
Though Carol had trouble finding a job, Charles was not worried.
"I thought it would be easier for me because I had the training and I
had a degree," he said. But he soon learned otherwise. "I'm looking for
a job and there was nothing. I would be celebrating if I got a call
back."
Slowly, their life began to unravel. When they were laid off, both were
making about $60,000. Each got severance of about $10,000, and they
lived on unemployment.
They have taken no vacations and have cut back on spending, Carol said.
For a while, they couldn't afford to keep up their health coverage. And
with a $1,900 mortgage payment, they eventually had to sell an
investment property in East Brunswick, using the $195,000 to pay credit
card bills and debts.
"Oh, my God, we were almost going to lose our home," said Carol. "We
were almost at the point of divorce. It was very stressful. I felt that
he wasn't looking enough. He felt that he was. It was terrible.
"My son was getting upset about this," she said. "Because we rarely
fight. it was very stressful for him too. ... Around the table we would
say grace. And Zak would say: 'Dear God, please let Dad find a good
job.' "
Finally, last February, Charles took a job as a waiter at an Italian
restaurant.
"I remember the first time he came home from working at the restaurant.
He started to cry," said Carol Hroch. "He said, 'I don't deserve this.
I should be sitting at that table, not serving these people.' "
To make matters worse, they said, they couldn't afford retraining to
learn new skills. They have now joined a lawsuit against the federal
government, demanding that it pay to retrain computer and office
workers whose jobs went abroad, just as it does for manufacturing
workers.
In April, the Hrochs found some relief: Charles found a temporary job
as a business analyst for Merck Health Solutions in Montvale. The
salary is similar to his old one. But the job ends in December.
Carol, who now works as a school bookkeeper, has given up on IT.
"I'm done," she said. "I don't think I can live through another layoff.
... I feel now for people who lost their jobs in manufacturing. It's a
living nightmare.
"You can't find a good job, a job that was comparable to the salary you
were making," she said. "It's impossible to sustain the lifestyle that
you are accustomed to, that we worked for. I'm very angry that no one
is doing anything about this."
Dividing time between very different worlds
Krishna Rathi's mother, Chand, had cried when he told her that he was
going to work in Los Angeles for a month or two.
Chand's two daughters had recently married and moved out of the
family's small, four-room apartment in Chennai. Now, her only son, a
computer programmer, would leave - albeit temporarily - as part of his
work for outsourcing company Polaris Software Lab Ltd.
"I have never been far away from here," said Rathi, 26, one recent
evening. He sat cross-legged on a flattened mattress on his living room
floor. "I have been with my parents always."
Nearby, his mother - a handsome woman dressed in a purple sari - sat on
the floor, her arms decorated with gold amulets. She interrupted
frequently in the Marwari language, saying she hadn't wanted to be
separated from her only son.
Nevertheless, in January 2003, Krishna Rathi left. He made four trips
to California that year, visiting a Polaris client, training there and
returning to Chennai to do client work.
Rathi stands astride two worlds: that of the smart, air-conditioned
order of a global outsourcing company - with its standards and dicor
set by corporate America - and of the traditional, chaotic and
impoverished urban India.
Polaris was his first job after getting a business degree and studying
computers at one of India's prestigious Institutes of Information
Technology, modeled after MIT.
Until then, he was heading for accounting, the profession of his father
and his grandfathers.
These days, Rathi's mother is focused on finding her son a bride. The
problem is that, at 6-foot-4, he is so tall that she can't find anyone
compatible.
"There have been people where the alliances is right," she said,
referring to the Indian tradition of arranging marital vows between
people from affiliated families. "But the height is wrong: 5-foot-2,
5-foot-3. Too short."
On a recent evening, as Krishna opened his door to visitors, a bullock
stood outside, tethered to the door a few yards from the cart it pulls
around the city delivering goods.
Krishna lives on the top floor of a three-story walk-up with a
wrap-around balcony in a section of the city that bustles with import
and export business. Motorized rickshaws, bicycles and motorbikes
buzzed and rattled down the narrow, bumpy streets as a group of men
stood and talked outside a tiny electronic repair store stacked with
old radios and cassette players.
Water is delivered to the building by tanker, stored in the basement
and pumped up to the apartments. It's an unreliable system, Rathi
explained. So on this evening the apartment was filled with large
plastic buckets of water, just in case the supply runs out.
The family moved into the apartment four years ago. They were able to
flee a building that had even worse water problems, thanks to the extra
income generated when Krishna joined Polaris. Though he declined to
specify his income, a company official said the job typically pays
25,000 to 30,000 rupees a month, or $550 to $650.
Out of that paycheck, Rathi pays 900 rupees, or $20 a month, for water,
and 4,000 rupees a month for rent - about $90. He hopes soon to buy a
1,000-square-foot, single-story house, which will cost 2 million
rupees, or almost $45,000.
Rathi bridles at the suggestion that India is poor, and says that the
IT industry is helping to create a better future.
"I'm proud to be in this field, which has changed the country," he
said. "Globally, it has made India a nation to be reckoned with."
E-mail: morley@northjersey.com
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