Silicon Passage Leads to India
The country's pool of programming experts is now developing the next generation of U.S. software
India's crowded streets, undrinkable tap water and over-populated cities do not suggest an environment prone to fostering information technology innovation. But this historically poor nation has cultivated a rich resource in its enormous pool of computer programming professionals - and now American software giants are charting their passage to India.
Since the late 1980s, United States companies have used cheap offshore Indian labor to help with mundane and repetitive programming activities, setting up software sweatshops around growing Asian cities, such as Bombay and New Delhi. However, India's information technology business has reached a higher level of expertise over the last year and the nation's programmers are now developing America's future software products.
"A new era has begun in India. It's not just a programming country anymore, it's getting into designing products," said C.N. Madhusudan, an Indian information technology consultant at NIIT (USA) Inc., in Atlanta. Today, India's computer scientists are writing the multimedia programs, interactive television systems and other future codes for the top U.S. computer companies, including Motorola, Novell, Microsoft, Hewlett-Packard, Texas Instruments, Unisys and IBM.
India's government is relaxing its traditionally harsh import and foreign investment rules and is investing billions to improve its telecommunications infrastructure. As these changes take root, American companies doing business in India will be in an ideal position to take advantage of the country's exploding market.
India's software industry is growing at a staggering rate, up to 70 percent a year, according to one World Bank economist, and its software exports are also on the rise. Indian companies are already the world's largest exporters of computer software after the United States, earning about $483 million in 1994, according to the National Association of Software and Services Companies in India. The association expects exports to reach $1 billion a year by 1997. Of the software India exports today, 61 percent goes to the United States. But now American companies hope to shift the trade imbalance in their favor.
As American companies are moving into India by forming joint ventures with Indian concerns, U.S. executives are eyeing the country's 250 million middle-class consumers. "Their middle class is about as large as our population," said David Reingold, vice president at Computer Horizons Corp., a Mountain Lakes, N.J., information services company that recently formed a joint venture with The Birla Group of New Delhi.
But American companies aren't just setting up software development shops in India to reach these new-found consumers. Even though low labor costs are alluring -- it costs at least 50 percent less to use an Indian developer -- it's quality programmers that are really attracting U.S. companies to India.
Companies are moving operations to India because the country's information technology engineers possess the next-generation computing skills -- the client/server and object-oriented programming abilities -- that are harder to find in the U.S. workforce. There's a real shortage of American programmers with these skills, according to a report by Cambridge, Mass.-based Forrester Research, which surveyed Fortune 1,000 CEOs who said they have to delay development plans because they can't find enough people with client/server capabilities.
In contrast, India is flooded with client/server programmers because the country has been working on UNIX-based platforms for more than a decade, said Sumit Ganguli, a project director at New Delhi-based Birla Horizons International, a joint venture between Computer Horizons Corp. and The Birla Group, a 135-year-old Indian company. In the 1980s, India didn't have access to the large IBM mainframes that were spreading across America, so the country's programmers became specialists in desktop computing.
India's client/server specialists are what attracted Computer Horizons to Birla, Reingold said. "We needed to find these resources to be competitive," he said.
The pool of Indian programmers with client/server skills is one of the reasons Novell set up a software development center in Bangalore, India, late last year. It's also why Mastech Corp. of Pittsburgh, Pa., has two centers in Bangalore, an Indian city that's called the Silicon Valley of the East because of its high concentration of technology firms and its temperate climate similar to California's Silicon Valley.
In addition to having well-trained computer scientists, India's time difference can make American firms more productive. U.S. companies that set up software shops in India and the United States can be developing and producing code basically 24 hours a day because of the 12-hour time difference between India and the United States. "That ability boosts productivity many times over," said Mastech Chairman Sunil Wadwani.
Another reason that India lures American companies looking for an Asian presence is because Indians speak English. Mastech's Wadwani said the fact that India is the second-largest English-speaking workforce in the world was a big reason he began offshore software production there two years ago. Reingold of Computer Horizons agrees that India is such a successful match for American computer companies simply because there is not a language barrier as there is in China, Russia and other countries that are attractive to send software development work.
"We've used German, French and Russian workers before who were well-skilled, but they were slower because they basically translated as they went along," Reingold said. However, even though a common language is spoken among American and Indian partners, sometimes there are still some tricks, said Jack Shaw, chairman and CEO of Hughes Network Systems Inc.
"Just because we all may speak English, we can't assume that we speak the same English," he said at a recent speech in Santa Clara, Calif. A possible business glitch: In the United States, a "tie-up" means a snarl, such as a traffic tie-up. "But for an Indian, a tie up is, of course, a partnership," he said.