But as things turned out, it could be quite the reverse.
“Sometimes our employees had to apologise for doing a better job than the people who taught them. That has changed how they think. They realise they don’t have to feel they’re inferior to anyone.”
• • •
The opening of Nehru’s Independence speech, one of the most quoted passages of all twentieth-century rhetoric, contains a glaring error.
When it is midnight in India “the world” does not sleep. When it is midnight in India it is tea time in London and cappuccino time in San Francisco. And, as it turned out after 1991, there were billions of dollars to be made from this rudimentary geographical fact.
If there was one commercial development that became iconic for the new, globalised India, it was ‘business process outsourcing’ (BPO). The idea was that, given the state of contemporary telecommunications, a company’s various functions did not all have to be grouped in one place. They could now be distributed throughout global space with no loss to functionality. Enormous cost savings could be achieved by moving non-core activities to lower-wage locations. Though this redistribution had already begun elsewhere in the world, it was the entrepreneurs of post-liberalisation India, above all, who turned the theory into a world-changing reality. And one of these entrepreneurs was Raman Roy.
At the moment of liberalisation, Raman was working for American Express, one of the foreign companies that had remained in India since British times. In the new climate of the 1990s, Raman helped convince his US bosses to consolidate the company’s Asia-Pacific accountancy work in Delhi, where costs were low, and educated English speakers plentiful.
Perhaps it is difficult to remember now just how unlikely this must have appeared at the time. India seemed remote and primitive to most Americans, and the idea of moving a significant chunk of an American financial giant there was unorthodox to say the least. But as with many eccentric ideas, this one helped the people concerned to see the world in a different way. Over time, American Express transferred more and more of their ‘back office’ operations to Delhi — and Raman realised that there was a hitherto unimagined kind of value locked up here.
By the middle of the 1990s, a number of immense forces were converging on this little experiment. In India, the lifting of restrictions on business and capital continued apace, and investment funds flowed in to fuel the resulting entrepreneurial frenzy. One group of companies that rose very quickly to prominence was the new IT firms, founded mostly in the south of the country. The most dazzling of these was Bangalore-based Infosys, which in 1999 was listed on Nasdaq, where its valuation a year later hit $30 billion. This ascendancy derived not simply from the fact that these companies were delivering software systems to global corporations at half the cost of their American counterparts. No: their Indian location allowed them to compress not just money but also, and just as importantly, time. Indian consultants worked alongside their US clients during the American day and then sent a brief to India, Indian software teams worked through their day — the US night — and American clients could view the results first thing in the morning. Two working days had been extracted from one. By the time Raman Roy was thinking about cutting up American corporations and placing their various functions in different parts of the world, he could see several other people in India who were trying to bend the world in similar ways.
It is no coincidence that such thinking arose in a formerly closed and state-controlled economy. The entrepreneurs who emerged from that environment were full of revolutionary zeal, and took great pleasure in erasing the national boundaries that had hemmed in their childhoods — to an extent, in fact, that unnerved many of the Americans and Europeans who subsequently found much of their lives administered from the other side of the world. These entrepreneurs were intelligent iconoclasts who believed in technology and corporations, and hoped to use the power thereof to overturn nearly everything of the India that had existed before 1991. And yet they were Indian, and when they looked at the world of American business they did so with a foreign, unaccustomed eye. “How is it they have never thought of doing it like this?” they said to themselves, and went on to change things.
Perhaps it helped that they came from a land where trading families had for centuries spread their members out to different places on the planet in order to spot the commercial gradients between them. When one talks to members of these families, even those who are highly parochial in their personal habits — arranging only intra-caste marriages for their children, for instance — one often discovers an astonishing indifference to location and distance. It is precisely the regimented nature of their family structures, in fact, that frees them to such a flexible and unsentimental relationship to place. There are no facts except cost and revenue, and if the latter exceeds the former then the deal is good, no matter how bizarre the geographical effects.
Not entirely coincidentally, this Indian form of globalism was unleashed just at the moment when it could merge with another major transformation in the global economy. American corporations had spent the previous decade moving manual work overseas, both as a cost-reduction exercise and as a political assault on American workers, who enjoyed more bargaining power than the far-flung characters who increasingly laboured in their stead. This idea of the globally dispersed, low-friction corporation had a heroic appeal to American — and many European — boardrooms of the time and, as new communications technologies began to erode the information distance between one place and any other, it was natural for them to ask if there were other, non-manual, functions that could be moved overseas, with similar financial and political gains. Since many of these functions demanded large numbers of English speakers, India, with its much lower cost base, was an obvious place to look to. Using Indian, instead of American, software developers showed that the idea had great potential, and the stage was set for American corporations to start breaking off parts of their own internal operations and sending them in the same direction.
The other factor in the emergence of Indian business process outsourcing was the existence, just outside India’s capital city, of an enormous zone of high-tech real estate where all these chunks could land. This was the new suburb of Gurgaon. DLF, the real-estate company behind the development, had been slowly buying up plots of farmland to the south-west of Delhi since the early 1980s. When the restrictions on foreign companies coming into India were lifted, this territory revealed a value beyond imagination. Gurgaon supplied the essential infrastructure to a major realignment of global corporate forces. Bordering Delhi in the neighbouring state of Haryana, it was conveniently close to the capital’s international airport and was far preferable to corporations than anywhere in Uttar Pradesh, the other neighbouring state, which was known for its criminal activity. By the end of the 1990s, corporations were setting up there in droves, many of them moving out of the land-choked corporate capital, Mumbai, to do so.
The trigger for this incredible rush to the Haryana brushland had come with the announcement by General Electric, the world’s seventh-largest corporation, that it would set up a new operation in Gurgaon. Named GE Capital International Services, the new entity would run global back-office operations for GE Capital, GE’s finance company. In 1996, Raman Roy got a call asking if he would be interested in further developing his experiments at American Express at ‘GECIS’. He went to Delhi’s Oberoi Hotel to discuss the prospect with the president and CEO of GE Capital, Gary Wendt.
In an era of dazzling corporate energies, Wendt was a prime mover who understood the radical opportunities associated with global deregulation. At the beginning of his command, GE Capital had no operations outside the United States: by the time he came to Delhi it was spread over forty-five countries. Under Wendt, financial services had become the largest and most profitable part of the General Electric group, overtaking every other division of what was, in its origins, a manufacturing company. He had achieved this in part because he was an operational genius who understood how costs and revenues could be entirely restructured in the global era.