India's New Faces of Outsourcing

Before he supervised teams, wooed American 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 -- American 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-based Approva Corp.'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 Americans 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 a welcome one. 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 emigres settled in the Washington 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.

Ironically, during 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 with 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's 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, 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."

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-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-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. They say traffic has worsened, prices are rising and infrastructure cannot keep pace with growth. 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 workforce -- and the malls, nightclubs and restaurants catering to them -- gives Pune the feel of Boston or Austin, cities also transformed by technology companies.

Tech firms here have created office parks that would not look out of place in Tysons Corner or Reston, but even in office decor, they strive to bridge the gap between the two cultures. Gupta recalls how the original color scheme for IMC's new offices in Pune was so loud -- even more than so than in the Silicon Valley dot-com boom of the late 1990s -- that he intervened to tone it down. "In the U.S., most of our offices are conservative: white walls, blue carpets," he said. "In India, offices have oranges and pinks and yellows. I was trying to balance the two cultures." Even with Gupta's modifications, IMC still bursts into bright blues and yellows and oranges, from ceiling to floor.

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. IMC, for example, now relies on employees such as 32-year-old Manjiri Joshi to discuss projects with customers. She has traveled to the United Kingdom and United States several times and continues to deal with customers from her office in Pune.

And in years past, Approva's Boccasam noted, Indian workers used to be shy about requesting their holidays off, even while rushing to meet special deadlines for American supervisors before Christmas or Memorial Day. Now, he said, Indian developers are becoming more assertive, at times demanding that their U.S. colleagues meet their deadlines so the Indians can make it back home for Diwali, the Hindu festival of lights, or Eid, marking the end of Muslims' fast during Ramadan.

"I feel like the guys and gals out there have a new spring in their feet. They are very confident in their own skin and in how they deal with cross-cultural issues," Boccasam observed.

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."

Much of his day is spent fielding technical queries from clients and senior managers. And the technology experts are in India; not a single software developer works in Reston.

"You need to be able to manage teams in India or Chicago now," said Approva's Garrity. A foreign adapter rests on his shelf in Reston, needed to charge his laptop when he travels to India.

To be sure, this business model business poses challenges. "We're not together, obviously," Garrity said. "Sometimes, you just want to walk down the hall and talk to someone."

A team of Approva's Reston-based executives is in Pune now to implement the goals outlined recently at a brainstorming retreat at the Sheraton Reston Hotel. While the Reston meeting marked the first time Approva flew in Indian staff to Northern Virginia for the end-of-year retreat, the current gathering is the first time a planning session is being held in India.

"The center of gravity doesn't have to be the U.S.," Boccasam said.