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Spring 2005

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A Global Mind
Offshoring is the wave of the future, and Wipro's Vivek Paul is riding it home

—Leslie Wolfe ’80G




	Vivek Paul learned the ropes at Pepsi and General Electric before helping transform Bangalore-based Wipro Technolgies from a modest $100 million software contractor in 1999 to a $1.3 billion offshoring leader today.

VIVEK PAUL ’82 HAS indeed done more than just enough. Recruited out of UMass Amherst’s MBA program by General Electric, Paul swiftly rose to the position of global head of GE Medical Systems. About five years ago, he left that post to join Wipro, a software services company based in his native India. As CEO of Wipro’s global information technology division, Paul helped Wipro’s annual revenue grow from $150 million to over $1 billion. Last year Time Magazine named him one of “25 Global Business Influentials.”

The trend of American companies contracting for services with overseas companies, known as offshore outsourcing, or offshoring, is Wipro’s bread and butter.

Shuttling between offices in Mountain View, Calif., and Bangalore, India, Paul commutes between the poles of offshoring. Involved with developing computer software as well as handling such things as claims processing for insurance companies, Wipro gets the bulk of its work from companies outside of India; approximately $1 billion of its $1.3 billion comes from the United States. This positions Wipro squarely in the middle of the offshoring controversy, and has made its articulate boss an energetic advocate.

Proponents of offshoring see it as a natural outcome of free markets. Labor advocates say that the playing field is not fair because foreign companies don’t have to adhere to U.S. environmental and health and safety standards; also, while American workers lose jobs, foreigners gain only low-wage work.

Just how worried should we be? “Offshoring benefits both the buyer and the seller,” says Paul. He cites three major ways in which everyone gains.

The first benefit of outsourcing is increased productivity. Paul illustrates this by using the introduction of automatic teller machines (ATMs) as an analogy. “Initially, ATMs reduced the demand for bank tellers. However, the productivity they provided yielded more employment opportunities,” explains Paul. “So, you can either look at it and say ‘Oh, my gosh! The ATM is killing employment opportunities for bank tellers!’ Or you can look at the fact that the delivered productivity allows banks to create more opportunities.”

The U.S. economy also benefits from the purchases made by the foreign companies. “You now have thousands of employees at Wipro sitting with Dell or Sun servers working off of Cisco routers, with telecom connections provided by WorldCom,” says Paul. “Our employees are flying back and forth on Boeing jets with GE jet engines.”

The third benefit is that offshoring can make up for the anticipated deficit in the workforce as the U.S. populations ages. “By the year 2020, the entire United States will be as old as Florida is today, and there will be a net deficit of workers-to-jobs of about four million,” says Paul. “One way that the United States can continue its economic growth, even as the workforce shrinks, as baby boomers retire, is to be able to adapt with global workforces.”

Even though offshoring is a profitable business for Paul and has real benefit to both buyers and sellers, he thinks its actual impact has been overblown, both in the United States and in India. “The entire quantum of people working in outsourcing accounts for 0.2 percent of the population of India,” says Paul. “The 99.8 percent of India that is not being benefited by this outsourcing is asking the government to find some way for them to benefit as well. So what you see is that the hype at both ends of the oceans create a disjointed sense of reality.”

At the same time, Paul says global trade is hastening a coming-of-age of the Indian economy. “For example,” says Paul, “in January, India signed on to the protection of intellectual property for pharmaceuticals because it felt it needed to be a trusted partner in the global trading network.”

The importance of being a trusted partner is a lesson learned at UMass Amherst. Paul says he and fellow foreign students were “babes in the woods. I had never left India before.” But he remembers how Bertil Liander (then director of admission at the School of Management) stepped in to help. “Bertil gave us an opportunity to work our way through school with assistantships,” says Paul. “That was enormous, that token of trust and faith.”

Now living in California with his wife and three children, Paul has as much stake in the U.S. economy as in his Indian business. He wants a fair playing field for all workers, as well as a safety net for displaced American labor. As Paul puts it, because of the measure of trust given to him at UMass Amherst, he feels “a great degree of happiness, but also a great degree of responsibility.”

Related links:

http://www.wipro.com/

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