As outsourcing evolves, so does a city in India

Before he supervised teams, wooed U.S. clients over dinner or sat in a Northern Virginia boardroom alongside U.S. executives, Constancio Fernandes wrote computer code for a living.

That's how it started in the late 1990s — U.S. businesses ordered up software applications, and Indian programmers such as Fernandes dutifully delivered. But somewhere along the way, Fernandes became more confident and outspoken. He began questioning the Americans and suggesting cheaper, faster ways to run their businesses. They listened.

"Most of the companies in the U.S. used to see Indian companies as sweatshops," said Fernandes, 33, who began as a programmer but is now the director of engineering at Reston, Va.-based Approva's offices here, supervising product-development teams, tracking projects and improving engineering techniques. "The changes have been phenomenal."

Fernandes represents a generation of Indian workers that is redefining outsourcing from call-center and back-office work into higher-level management and strategy jobs — areas that U.S. workers have often regarded as safe from overseas competition.

As they climb higher in the corporate food chain in transnational firms, Indian workers and executives are pushing their U.S. counterparts to take them seriously, taking on greater responsibilities and subtly changing the corporate culture of both countries.

In Pune (pronounced POO-neh or POO-nah), a city on India's west coast, where several Northern Virginia technology firms have established offshore operations over the past decade, the shift has been welcome.

The unlikely relationship between these two regions, about 8,000 miles apart, underscores how outsourcing has evolved in unexpected ways.

In the past, U.S. companies gave the marching orders to workers in India. Now, young Indian developers such as Fernandes and expatriate Indian business leaders are helping India gain a more equal footing.

At least five companies from Northern Virginia — all run by Indian émigrés settled in the Washington, D.C., area — have opened offices in Pune, helping turn this once-sleepy holiday getaway into a thriving information-technology hub. Billboards implore residents to buy luxury flats; office space is rented before completion; and lines trail outside restaurants and nightclubs, even on weeknights.

Flocking to city

In the 1940s, Pune housed key members of India's independence movement, who shunned imports and preached self-sufficiency. Now, U.S. businesses flock to this globalizing city, citing cheaper rents and lower salaries compared to India's other urban centers, such as the tech industry's informal headquarters in Bangalore — where costs are an estimated 15 percent higher.

The city also boasts the University of Pune, which churns out qualified, English-speaking engineering graduates ready to work.

"Nobody wants arts or history anymore," said Gautam Sidharth Singh, 19, a first-year student majoring in electronic engineering. "All of my friends want IT."

Despite the controversy outsourcing has generated in the United States, the practice has boosted business in Northern Virginia, executives said.

"I don't think Approva would exist without this model," said Tom Garrity, who is Fernandes' U.S. counterpart as the company's director of engineering in Reston. "We've created 100 jobs in America because of outsourcing."

The staff in Reston works mostly in sales, marketing and management. Meanwhile, Approva employs 120 people in India in a gamut of jobs ranging from software engineers and consultants to managers and technical writers.

The company, founded by Indian-born Prashanth V. Boccasam, produces software that helps U.S. companies comply with the 2002 Sarbanes-Oxley Act, aimed at preventing accounting fraud and improving business governance. In this way, the recent spate of corporate scandals in the United States has provided a boost for Indian businesses.

In India, Boccasam found a large pool of employees who could understand both accounting and computer programming — and for a fraction of the cost in the United States. Top-level software developers can be hired here for about $30,000 annually, a whopping income in India yet just a third of the salary their U.S. colleagues would command.

Beyond the cost advantage, Boccasam values a certain skepticism he finds inherent to Indians.

"It doesn't matter if you are buying vegetables or dining at a five-star hotel — you will always count your change," said Boccasam, who attended the University of Pune and immigrated to the United States in 1988. "That's an auditing function. The guys in India know every scam there is out there."

Clued into scams

Even Approva's office decor highlights this quality. A picture on the wall displayed an elderly businessman flanked by two scantily clad women in a casino. "Noticed the 'consulting' invoices Pete's been approving?" it asks. "We will."

Approva marks Boccasam's second U.S. company with an office in Pune. In 1995, he and a college friend, Amir Hudda, founded Arlington, Va.-based Entevo Corp. and opened a development center in Pune, relying on contacts made in their university days.

The company was eventually sold off. Hudda's latest venture, Herndon, Va.-based Apptix Inc., opened its Pune office in September — just two floors down from another Reston-based company, IMC Inc., which opened an office here in 1995.

Some residents fear that Pune's boom is undermining the city's charm and tourist appeal. Like so much of an India in transition, Pune is feeling the push and pull between tradition and modernity.

The struggle is familiar to business leaders who divide their time — and identity — in different places. The immigrants running these Northern Virginia tech firms serve a unique role as they straddle two lands and two cultures.

Prakash Gupta, president of IMC Global Services Ltd., the Indian subsidiary, travels frequently between Reston and Pune. On a recent morning, as he entered the area at the Pune facility where dozens of developers code and execute projects for U.S. customers, several employees tried to stand as a sign of respect — as Indians reflexively do in the presence of bosses, teachers or the elderly.

Gupta waved them down, reminding them to call him "Prakash," not "sir," as their British-inspired education might have taught.

IMC employees, mostly in their 20s, tend to socialize together outside work. The mix of university students and a young work force — and the malls, nightclubs and restaurants catering to them — gives Pune the feel of Boston or Austin, cities also transformed by technology companies.

Not long ago, U.S. companies hesitated to allow their Indian computer programmers to deal directly with American customers, citing the need to retain control.

Eventually, however, Indian workers convinced their bosses that it saved time and money if they worked directly with clients.

Such interactions have changed the Americans, too. Some U.S. executives say it took time to adjust to Indian accents and made-up Indian-English words such as "updation" (the noun form of "update").

And while in the past, Indians often worked overnight to accommodate the U.S. workday — and that is still the norm in the burgeoning call-center industry — several U.S. Approva executives now reach their Reston offices by 7 a.m. so they can catch the Indian employees at the end of their workday.

"Five years ago, I would have told you we're the head and they're the factory," said Silas Matteson, Approva's vice president for products in Reston. "That's changed."