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Offshoring: A view from both shores

Wipro Technologies CEO Vivek Paul is a U.S. citizen who also happens to spearhead outsourcing efforts for one of India's biggest IT companies.

Vivek Paul occupies a unique vantage point in the controversy roiling the technology industry over offshore outsourcing.

An American citizen, Paul also is a native of India and chief executive officer of Wipro Technologies, one of that country's largest IT service companies. Many American techies are increasingly bitter about the pickup in the stream of IT jobs from the United States to India, arguing that the trend threatens to erode job prospects in the nation's high-tech sector. At the same time, however, members of the Bush administration and a number of economists argue that the natural flows of capital can't be artificially stopped at the borders and that outsourcing is essential to improving corporate productivity.

Paul, who became a U.S. citizen in 1991, recently spoke with CNET News.com about the growing fear in many quarters that offshore outsourcing will undermine U.S. tech leadership.

Q: What is your response to people who fear the U.S. is losing its technology leadership because of offshore outsourcing?
A: That is really befuddling, because the U.S. is only securing its technological competitive advantage. (Look at) patents that have been written by Indian software engineers in Wipro. The individual engineers get the credit; the ownership is the customer's. So in some sense, U.S. technology companies are racing out ahead of their global peers to tap into the intellectual base that is in India. If the U.S. were to repel it in some way, it would create its future competitor. By embracing and directing it, the U.S. has pre-empted competition.

But if some of the programming jobs that are lower-level jobs go to an Infosys or Wipro--in application development, application and maintenance type work--how are you are going to get the expertise that will later lead to higher-level jobs?
That has a built-in assumption (that) there will not be enough jobs left in the U.S. to fulfill the indigenous graduating engineering base. That is not true. If anything, the number of engineers graduating in the United States is dropping. As (General Electric CEO) Jeff Immelt said, the U.S. graduates more sports therapists than engineers. In some sense, the U.S. is filling that gap with imports of people. In other words, people are flowing to where the work is--immigration.

I think that it is perhaps too jaundiced a view to think that the U.S. economy would not generate as many jobs for engineers as there are engineers. We have got a dropping number of engineers, a growing economy and already the gap is being filled more by immigration than by local demand.

Is the decline in the number of U.S. engineering degrees a problem?
Absolutely. A lot of my friends ask me, "What should I tell my kids? If all the manufacturing jobs are going to go to China, all the engineering jobs are going to India, what should I tell my kids to do?" My answer is--and I may be biased because I am an engineer: "Hey, listen, the cutting edge of technology will always be here, and the shortage of engineers only means there is more demand for them."

The U.S. graduates more sports therapists than engineers.

Should the U.S. do more to attract foreign students, such as Indians or Chinese?
The U.S. never wants to lose its ability to be the place where the best talent in the world wants to gravitate. And it should never be fearful of change. To somebody from the outside looking at this debate, it is staggering to think of a U.S. that has anything less than complete self-confidence in its ability to reinvent itself.

What should be done to make the country more attractive to Indian students? Should we be easing up some of the visa checkpoints? That has been slowing things down for students.
Post-September 11, there was an impact. There was a feeling that if you looked Middle Eastern, then somehow you would get stopped more. I had friends who were like, "I do not want to go to the U.S. now." The U.S. response was perhaps verging on the exclusionary.

That concern has gone away. What remains now is the ability to be able to give people who are graduating from Chinese and Indian universities a greater conceptual challenge, a greater intellectual challenge, as well as a greater reward system. Both of them are available in plenty.

So what should those incentives be, exactly?
Making it easier for immigration would certainly help, because what is happening is that the visa pipeline has been a joke. Now that there are no more visas available, people can't come even if they wanted to.

You're talking about H-1B visas?
That is right. The H-1B visa is the classic visa that a graduating foreign student uses between the student visa and the green card. You've just snipped off that link in the chain. You cannot go from student visa to green card. The single biggest thing that can be done is to fix this H-1B situation.

In other words, a student might be less willing to come to the U.S. because they see that the number of H-1B visas is small and they might not be able to stay here?
That's right. (They'll say) "It is going to cost me a fortune to go to a university in the U.S., and my employment after that is not certain. In fact, it is quite uncertain. What if they cut the visas back even further?"

Let me ask your thoughts about recent political changes in India. Are you comfortable with the Congress Party coming back into power and the new leader that has been put forward as the next prime minister?
If I go back 14 years ago, I was actually part of the wave of General Electric (employees) first entering India. In some sense, I was leading GE?s efforts to invest in India and build India as a market. I was facing a resistant government on the other side. They wanted to be closed. I remember personally seeing what Dr. Manmohan Singh, who is now prime minister and who was then the finance minister, did to open up the economy. In some sense, he blasted away many of the sort of constraints that were holding us back. I look at that and say, "Boy, there is nothing wrong with having him be the guy who is running the show." The things that you worry about are: What are the compromises that need to be made with small political parties to keep the coalition alive?

It is staggering to think of a U.S. that has anything less than complete self-confidence in its ability to reinvent itself.

The Communist Party, for example?
That is right. But my own sense is that once the new government achieves liftoff speed on its own, then the side parties know that if they go, somebody else can come. The balance of power tilts back to the party that has the dominant share.

Wipro's chairman has been active in setting up a foundation. Besides offering good jobs, has Wipro done other things to try to alleviate some of the poverty issues in India?
We have focused our noncommercial efforts on education...on two fronts. One is for the "haves," which means people who can afford to go to school. We have been launching a new kind of education program that is more discovery-based, rather than rote-based, a criticism that we hear a lot about in India.

At what grade level?
We basically do it from grade four to eight. It is in private schools. It's in public schools as well.

When you say you are focused on "haves," who are you targeting?
People who already go to school. And then we take into account the fact that something like a whopping 60 percent of India?s kids don't go to school.

Primarily in the rural areas?
Right. That part of the work typically is oriented around how to get kids to schools. It is a completely different set of challenges. If you are within an hour?s drive from a metro area, you are classified as a "have." If you live more than an hour's drive from a metro area, you are a "have not."

How do you give them the infrastructure they need? You want to give every school a computer, but you certainly cannot afford to give every school a computer. So we worked with a local entrepreneur who would set up a computer center in the school, and from 8 to 5, that computer is available to students. From 5 to midnight, it is a for-fee service for locals who want to do e-mail or whatever. The entrepreneur makes money, while we get the infrastructure in the school. The kids benefit and the locals benefit because they have now access to e-mail.