By John Lancaster
Washington Post Foreign Service
Saturday, May 8, 2004; Page A01
CHENNAI, India -- In the traditional Brahmin neighborhood where he lives with his aging parents, Shyam Natarajan begins his day with a trip to the family prayer room. He daubs vermilion powder on his brow, lights incense and an oil lamp and chants Sanskrit verse to a portrait of Surya, the sun god, before heading out the door to work.
A few hours later, in a hushed, air-conditioned sanctuary behind a door marked "Great Minds at Work -- Do Not Disturb," Natarajan sits in front of a computer screen and prepares to change the life, in a small but beneficial way, of a police officer and his wife in Kansas.
Fortified with several cups of strong South Indian coffee, Natarajan evaluates the couple's request for an $18,000 home equity loan, poring over application forms, credit reports and other data supplied by E-Loan, an Internet-based lending company headquartered in Pleasanton, Calif. Fifty minutes later, satisfied that the applicants are a good risk, he recommends the loan for approval.
Natarajan, 24, a slender, goateed vegetarian who likes volleyball and Led Zeppelin and expects his parents to find him a suitable bride, is one of the thousands of young Indians who have profited from the boom in outsourcing of service jobs by U.S. firms lured by India's low labor costs and large pool of English-speaking talent.
In the United States, the trend has sparked a political backlash and a flurry of legislative proposals to discourage the practice. Sen. John F. Kerry of Massachusetts, the presumptive Democratic presidential nominee, has denounced "Benedict Arnold" corporate chiefs who send white-collar jobs abroad.
But to spend time in the E-Loan operation of Wipro Spectramind, a large Indian firm that provides back-office support for clients in the United States and elsewhere, is to grasp the ruthless economic logic of outsourcing -- at least for some business tasks -- and why the trend might be difficult, if not impossible, to arrest.
By means of the Internet, Natarajan and nine other E-Loan underwriters -- college graduates who earn between $220 and $330 per month, a fraction of what E-Loan pays its U.S. employees for the same work -- can analyze and process loan applications as easily as if they were working down the hall. Moreover, because of the 12-hour time difference, the Indian employees can work while their counterparts in California are sleeping. That allows the company to trim two days off the 12 that it normally takes to process a home equity loan, according to E-Loan's chief executive, Chris Larsen.
"Every single company we know of is looking into it," Larsen said in a telephone interview. "The pricing and efficiency component is too compelling. You can't turn your back on it or you simply won't be competitive."
The trend began decades ago. Barbados, Ireland, the Philippines and China have been among the overseas destinations of white-collar work. Most of the U.S. jobs that have migrated to India are concentrated in call centers -- where Indians coached in American diction handle customer phone calls for mail-order companies, airlines, software firms and the like -- and back-office operations such as medical records transcription and data entry for insurance firms. Some Indians speak disparagingly of "cyber-coolies."
But as U.S. firms warm to what has been termed the "death of distance" made possible by the Internet, their Indian contractors are graduating to more complex and profitable tasks. Building on successes in computer programming for distant clients, they are moving into fields such as research and development for computer chip design and biotechnology.
This year, revenue from what is known here as "business-process outsourcing" -- including call centers and back-office operations -- is projected to grow by about 54 percent, according to National Association of Software and Services Companies, the Indian industry's main trade group.
Still, this outsourcing of service jobs accounts for only a tiny share of India's farm-dominated economy. It absorbs only about 100,000 of the roughly 2.4 million students who graduate from college in India each year, the trade group estimates.
It has made little dent in national unemployment figures that remain stubbornly high -- the official figure is more than 8 percent -- despite boom-level economic growth in a country that is slowly dismantling state industries in favor of private enterprise. According to the International Monetary Fund, good harvests and low interest rates helped the Indian economy expand by about 8.2 percent in the year that ended March 31.
But the new jobs from outsourcing have given a psychological lift to a generation of educated young people whose options might otherwise have been limited to paper-shuffling jobs in government offices or musty state-run banks, if they were lucky enough to find a job. And increasingly, it is helping to lend a sheen of prosperity to regional capitals such as Chennai, a onetime British colonial trading post on India's steamy southeastern coast.
Formerly known as Madras, the capital of the state of Tamil Nadu is a frenetic tropical city of 4.2 million people where sleek new office campuses coexist with palm-thatched huts, wandering livestock and brightly painted Hindu shrines. One of the biggest of the new facilities along the city's smoothly asphalted "I-T Highway" belongs to Wipro Spectramind, a subsidiary of Wipro Ltd., a onetime cooking-oil manufacturer that now has 30,000 employees and a global client base that includes Nokia, Otis Elevator and J.P. Morgan Chase.
Many of Wipro's U.S. clients do not want to be named for fear of political repercussions at home. But E-Loan is an exception. Since starting operations here in February, the company has immunized itself against much of the criticism of outsourcing by offering borrowers a choice between having their loans processed in the United States or -- if they want their money faster -- in India.
"We thought, let's do it, let's make it open, try to explain it, and also offer an opt-out for that group of people who under no circumstances would be comfortable with it for whatever reason, whether it be patriotism or racism," said chief executive Larsen.
So far, about 85 percent of E-Loan's home equity customers have opted for India, at a cost savings to the company of about 60 percent, and the firm is considering an expansion of the Indian operation into auto loans and mortgages, Larsen said. No U.S. workers have been laid off, he said, because the home equity business has grown fast enough to accommodate both sets of employees.
Natarajan, the sun god devotee and Led Zeppelin fan, is typical of the young Indians who have benefited from outsourcing.
The son of a tannery owner, he still lives with his parents in the family's ancestral home, a two-story structure with heavy wooden shutters and a small courtyard dense with plants. Like many Indian sons, he anticipates he will stay with his parents even after they find him a wife, which he trusts them to do. "They have been always taking care of me," he says. "I'm sure they would not do something bad on this particular thing."
But Natarajan's career path has been thoroughly modern. After graduating from Madras University with a banking degree in 2001, he worked for a computer training company before hiring on with Wipro 15 months ago.
During his first year, Natarajan worked a night shift transferring data from images of scanned documents into a mainframe computer for a U.S. mortgage firm. It was brain-numbing work. But the new job evaluating E-Loan applicants -- for which Natarajan and some of the other recruits spent a month training in California -- is considerably more challenging. Accessing records in the United States by means of a private data link, Natarajan spends close to an hour on each application.
Overnight, the work that he and his colleagues turn out is examined by quality-control specialists in California, and blunders are posted on an electronic notice board for all to see. Compared with his previous job, he said, "it's very advanced and it requires a lot of skills. You need to make a lot of judgment calls because each individual is different. He's got his own history."
Despite such pressures, the office atmosphere is relaxed. Workers dress in bluejeans, decorate their cubicles with balloons, and trade jokes and advice in a mixture of English and Tamil, the regional language. "God, $24,000 a month!" exclaims a young woman in a San Francisco T-shirt, commenting on the monthly income of a cardiovascular specialist seeking a loan in Oregon.
To guard against employees being poached by competitors -- an increasing practice in the industry -- the Wipro operation here offers a variety of perks, including subsidized lunches, a well-equipped gymnasium and free taxi service to and from work.
But the biggest benefit, perhaps, is hope. Like many of his colleagues, Natarajan regularly scans the job postings for opportunities to move into management, and he aspires to someday run his own business -- perhaps taking over and modernizing the tannery his grandfather started in the 1920s.
In the meantime, though, he is enjoying the work, his colleagues and his modest disposable income. He likes going to movies and occasionally joins friends for a whiskey at the Star Rock Resto-Bar, a trendy basement pub where the sound system throbs with Bon Jovi and Guns N' Roses. This summer, he plans to buy his first car.