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OT:  India's emergence in our industry

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India, Pakistan and G.E.

August 11, 2002
By THOMAS L. FRIEDMAN






BANGALORE, India - Two months ago India and Pakistan
appeared headed for a nuclear war. Colin Powell, the U.S.
secretary of state and a former general, played a key role
in talking the two parties back from the brink. But here in
India, I've discovered that there was another new, and
fascinating, set of pressures that restrained the Indian
government and made nuclear war, from its side,
unthinkable. Quite simply, India's huge software and
information technology industry, which has emerged over the
last decade and made India the back-room and research hub
of many of the world's largest corporations, essentially
told the nationalist Indian government to cool it. And the
government here got the message and has sought to
de-escalate ever since. That's right - in the crunch, it
was the influence of General Electric, not General Powell,
that did the trick.

This story starts with the fact that, thanks to the
Internet and satellites, India has been able to connect its
millions of educated, English-speaking, low-wage,
tech-savvy young people to the world's largest
corporations. They live in India, but they design and run
the software and systems that now support the world's
biggest companies, earning India an unprecedented $60
billion in foreign reserves - which doubled in just the
last three years. But this has made the world more
dependent on India, and India on the world, than ever
before.

If you lose your luggage on British Airways, the techies
who track it down are here in India. If your Dell computer
has a problem, the techie who walks you through it is in
Bangalore, India's Silicon Valley. Ernst & Young may be
doing your company's tax returns here with Indian
accountants. Indian software giants in Bangalore, like
Wipro, Infosys and MindTree, now manage back-room
operations - accounting, inventory management, billing,
accounts receivable, payrolls, credit card approvals - for
global firms like Nortel Networks, Reebok, Sony, American
Express, HSBC and GE Capital.

You go to the Bangalore campuses of these Indian companies
and they point out: "That's G.E.'s back room over here.
That's American Express's back office over there." G.E.'s
biggest research center outside the U.S. is in Bangalore,
with 1,700 Indian engineers and scientists. The brain chip
for every Nokia cellphone is designed in Bangalore. Renting
a car from Avis online? It's managed here.

So it was no wonder that when the State Department issued a
travel advisory on May 31 warning Americans to leave India
because the war prospects had risen to "serious levels,"
all these global firms who had moved their back rooms to
Bangalore went nuts.

"That day," said Vivek Paul, vice chairman of Wipro, "I had
a C.I.O. [chief information officer] from one of our big
American clients send me an e-mail saying: `I am now
spending a lot of time looking for alternative sources to
India. I don't think you want me doing that, and I don't
want to be doing it.' I immediately forwarded his letter to
the Indian ambassador in Washington and told him to get it
to the right person."

No wonder. For many global companies, "the main heart of
their business is now supported here," said N.
Krishnakumar, president of MindTree. "It can cause chaos if
there is a disruption." While not trying to meddle in
foreign affairs, he added, "what we explained to our
government, through the Confederation of Indian Industry,
is that providing a stable, predictable operating
environment is now the key to India's development."

This was a real education for India's elderly leaders in
New Delhi, but, officials conceded, they got the message:
loose talk about war or nukes could be disastrous for
India. This was reinforced by another new lobby: the
information technology ministers who now exist in every
Indian state to drum up business.

"We don't get involved in politics," said Vivek Kulkarni,
the information technology secretary for Bangalore, "but we
did bring to the government's attention the problems the
Indian I.T. industry might face if there were a war. . . .
Ten years ago [a lobby of I.T. ministers] never existed."

To be sure, none of this guarantees there will be no war.
Tomorrow, Pakistani militants could easily do something so
outrageous and provocative that India would have to
retaliate. But it does guarantee that India's leaders will
now think 10 times about how they respond, and if war is
inevitable, that India will pay 10 times the price it would
have paid a decade ago.

In the meantime, this cease-fire is brought to you by G.E.
- and all its friends here in Bangalore.

http://www.nytimes.com/2002/08/11/opinion/11FRIE.html?ex=1030184358&ei=1&en=4557d7e03e8af1ae



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