Pune, India
Tucked away in three converted storefronts at the back of an old shopping mall in this thriving city is a little company that explains why so many Americans are anxious about globalization.
Steven Pearlstein is a Pulitzer Prize-winning business and economics columnist at The Washington Post.
Here, dozens of ambitious 20-somethings are crammed in like commuters in a subway car, sitting at long banquet tables in front of well-worn computer screens creating Web sites and graphic interfaces and software applications for companies in the United States and around the world that they know little about, taking their assignments from people they will never meet or talk to.
Most of the workers make about $270 a month — enough to pay for a small apartment, a scooter and weekend outings to the food courts at local shopping malls. And they are sufficiently in demand that 40 percent of them move on every year to bigger firms such as Wipro and Infosys, which offer Saturdays off, subsidized lunchrooms with ping-pong tables, and the glamour of working in one of the gleaming new high-tech parks that have sprung up on the outskirts of this college town and industrial center.
The company is Panacea, and it gets half of its work by bidding for jobs through freelancer.com, an Australian outfit. With annual revenue of $150,000 a year, Panacea is one of the site’s most successful suppliers in India. And later this year, when Panacea expects to win its first ISO certification, owner Vivek Ghai hopes to land subcontracting work from local offices of Accenture and IBM, which he says typically charge $30,000 for jobs that he and his crew do for $3,000.
In many ways, Panacea is emblematic of the Indian economic boom, one built on low wages, entrepreneurial energy and Internet technology that has created the kind of perfectly competitive markets that once existed only in the imagination of neo-classical economists. What toys, shoes and electronics are to China, call centers, back-office processing and software development are to India, a fast-growing source of export-oriented jobs and wealth that is lifting millions out of poverty.
Like China, India’s success has come at the expense of some Americans whose livelihoods are being hurt by the low-cost competition. Unlike China, however, India’s exports to the United States are roughly balanced with its imports, allowing the benefits of trade to flow more evenly in both directions.
The problem for India is that it may not be able to rely on service-sector exports to sustain its growth. There is no likely scenario in which the demand for reservation agents and programmers — or India’s ability to supply them — can create the million jobs a month needed in a country of 1.2 billion where half the population is under 25. They can’t all work for Infosys.
India’s education system is already having trouble keeping up with the demand. Public elementary and secondary schools are underfunded and staffed by poorly trained teachers who too often don’t show up for work and who rely on rote learning when they do. And although India’s elite universities are world class, the quality falls off pretty quickly after that.
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