BANGALORE, India -- This is the epicenter of a revolution.

Here, on the outskirts of this crowded cosmopolitan city, sits the 65-acre campus of India's largest software exporter, Infosys Technologies.

Its 35 office buildings -- all built in the last decade -- include a library, a basketball court, a Domino's pizza shop and an auditorium with a huge video wall. They rise above a campus of gardens, shimmering fountains, neat lawns, and sidewalks swept by women wearing saris, using brooms made of palm stalks.

Mahesh Bhat, Special to the Post-Gazette

These young Indian technology workers, most in their 20s, may be the wave of the future for work that can be done offshore using the Internet and high-speed telephone connections. Starting salary for a college graduate at this Infosys campus in Bangalore is just $4,500 a year. Today's Installment For the 'Zippies,' life is good Founder of outsourcing powerhouse offers views A Q&A with Robert Reich on outsourcing About the author The Series DAY TWO: It hurts if it's your job going abroad DAY THREE: All day, all night, the phone calls come in DAY FOUR: Facing the challenges of a global work force

The Infosys campus, which employs 7,000 of the company's 21,000 workers worldwide, showcases India's aspirations to become a powerhouse in the global economy.

It also symbolizes what is happening to American jobs in Pittsburgh and other cities around the nation.

Infosys has just begun doing a significant share of the software development work for Mellon Financial Corp. -- jobs once performed in Pittsburgh. A growing number of other local companies also are using the highly educated but much less expensive Indian workforce to do computer-based jobs. And if they haven't begun yet, they're thinking about it.

Kevin Lowery, a spokesman for Alcoa, which already has employees in 41 nations, said "we do have a process in place right now, in which we are exploring where certain functions of our company might be done. I know we're not alone ... some would argue we're way behind."

A few Pittsburgh companies are helping to spearhead this "outsourcing" of jobs to Bangalore. Chief among them are iGate Corp., which has six Indian centers doing back-office work for major American firms and Acusis, a Downtown firm that hopes to become the leading medical transcription company in the world by using highly trained home workers in India.

Kennametal Inc. of Latrobe, a high-tech toolmaking company that recently purchased a plant in Bangalore, is following a parallel trend -- moving plants overseas to be closer to new customers in the developing world.

One result of all this economic ferment is Bangalore's burgeoning population. Already packed with 5.6 million people, the southern Indian city is growing by an estimated 3,700 residents a week.

The growth is being driven primarily by the high-tech explosion.

More than 100 multinational companies have moved to Bangalore since 1984, when Texas Instruments first arrived to use India for offshore development. The city is also home to 1,154 software companies, including home-grown giants Infosys and Wipro, and is beginning to see significant growth in firms that handle other business processes for American, European and Japanese companies.

In the past year alone, employment in the high-tech sector in India rocketed up by 23 percent to 813,500 people, according to the National Association of Software and Services Companies.

The services being provided encompass almost every office job imaginable, from supervising credit card and mortgage accounts to analyzing stock portfolios and rating insurance applicants.

Nandan Nilekani, chief executive of Infosys, formed the business with five friends in 1981, using capital borrowed from their wives. It has grown largely by luring away American jobs with promises of high-quality work and lower costs.

The way Nilekani looks at it, the U.S. service economy, which until recently was securely anchored inside the country, is now beginning to go through the same scattering process of globalization that saw American manufacturing, from shoes and steel to textiles and televisions, migrate to lower-cost countries.

And he doesn't see it diminishing.

"People across the world can plug into the Internet, the broadband, and become part of this global workforce," Nilekani said in his office overlooking the Infosys campus. "Globalization and technology have put the world into a trading ring, in a sense. Everybody is playing to their strengths."

'New economy' jobs affected
Although similar to the movement of manufacturing jobs, this is the first time the race to find cheaper and more efficient locations has involved the higher-skilled knowledge jobs that many Americans have turned to in recent decades for their livelihood.

	Graphic: Bangalore is the center of gravity of India's new economic boom. Click photo for larger image.

Faster and cheaper Internet connections have enabled anyone sitting at a computer, anywhere in the world, to do much of the same work that can be done in an office cubicle around the corner from where you sit.

And the work done in India is becoming increasingly sophisticated -- well beyond the telemarketing and computer help-desk services familiar to many Americans. Anything that can be sent down a wire is up for grabs. That includes many of America's most coveted jobs: stock market equities research; engineering and design; product research and development; and accounting, including the preparation of tax returns.

Pittsburgh's share of this transformation is symbolized by iGate Global Solutions, the Indian arm of iGate Corp., a firm founded in 1987 by Sunil Wadhwani of Mt. Lebanon and his friend Ashok Trivedi. Trivedi has returned to India to help develop new business opportunities for the firm.

Wadhwani and Trivedi have succeeded by taking advantage of two worlds -- the creative, enterprising business climate of the United States and the software development and other skills available in their native India.

About half of the company's 5,000 employees work for iGate Global in 10 development centers around the world, six of them in India, doing a wide range of jobs, from simple call centers to animation and high-end research and development. Its customers include GE and such other American icons as Cummins Engine and Philip Morris.

iGate Global is now creating plans to market sophisticated back-office processes to a wide range of companies in such fields as developing and servicing mortgages, managing credit card accounts and insurance policies, and providing statistical analysis and stock market research.

Practicing what it preaches to customers, iGate has moved some functions once done in Pittsburgh, including human resources and accounts payable, to Bangalore, where last month, it dedicated the first phase of a new office complex with winding walkways, trees and ponds. The complex can hold 900 workers per shift. A second phase now under construction will be big enough for an additional 1,700 employees.

India is making forays into medical work, too. In one example that already has created a small furor, radiologists employed by Wipro in Bangalore are reviewing X-Rays and MRI scans for Massachusetts General Hospital in Boston. They do not make final diagnoses, but highlight problems using three-dimensional computer models.

More common is billing and accounting work for doctors and insurers, and medical transcription services such as those provided by Pittsburgh-based Acusis, which has developed a sophisticated network of home workers in India to process dictation tapes from physicians.

The steady growth of these kinds of jobs in India and other English-speaking developing nations shows that outsourcing is quietly being embraced by more and more U.S. corporations.

Or maybe not so quietly.

In the last several weeks, it has become a politically explosive issue in the presidential campaign.

After President Bush's chief economic adviser, Gregory Mankiw, said that outsourcing is "just a new way of doing international trade" that would help the U.S. economy in the long run, Sen. John Kerry, the presumed Democratic nominee, accused the Bush administration of deciding, in effect, that "shipping American jobs overseas is good for America," and vowed to "repeal every tax loophole and benefit that rewards any Benedict Arnold CEO or company for exploiting the tax code to export American jobs."

Helping U.S. firms?
Despite the political rhetoric, the proponents of sending work overseas aren't just Bush political appointees.

Many economists say the trend is allowing businesses in America and other developed nations to remain competitive in an increasingly challenging global marketplace.

Companies that are hiring service firms in India can often do the same job for perhaps 40 percent less than they could in the United States. An Indian programmer making $20,000 a year, for example, can replace an American who earns $80,000 a year or more. And the lower salaries are only part of the equation. Costs can sometimes be cut further if the jobs are redesigned to be more efficient at the same time the work is being transferred overseas.

Those savings can help companies improve profits at a time when it is difficult for them to raise prices or to increase sales, according to Nilekani and many economists.

"Essentially what we are doing here is making our U.S. clients more efficient, more productive, more competitive and stronger, which means they can grow, they can create more jobs," Nilekani said.

That view is obviously not shared by many labor union leaders and industrial-state politicians.

Ronald Blackwell, head of corporate affairs for the AFL-CIO, said the trend is a blow to American workers who were warned away from manufacturing and working with their hands, and told they would ensure their futures by educating themselves in new technologies.

"We were told with the first wave of de-industrialization not to worry ... We just need to educate ourselves and the jobs will come," Blackwell said. "With this second wave, that is precisely the group that outsourcing is hitting the hardest -- the people who are educated, the people who are professionals, who see the economic basis of their security, their family's security, disappearing before their eyes."

There also is another key difference between the current job movements and previous ones, Rochester Institute of Technology professor Ronil Hira added.

Unlike the 1980s, when the semiconductor industry in the United States was losing billions of dollars and shifting thousands of jobs overseas, for example, employers this time around do not seem to be in dire economic straits, said Hira, a Rochester assistant professor of public policy who did his undergraduate work at Carnegie Mellon University.

Hira said the companies sending work overseas today are profitable, and most are gaining market share. Many of these companies are outsourcing, he said, because they think it's something they have to do to stay even with their peers.

Indian high-tech executives, now that they are tasting sweet prosperity from international trade, fear that the protectionist sentiment being fanned this election year could lead to legislation that would restrict outsourcing and dampen their economy's growth.

And if that were to happen, some Indians say America would only be shooting itself in the foot.

Chidanand Rajghatta, a columnist for the Economic Times in India, noted recently that Americans love the low prices made possible by overseas work, but not the low salaries that threaten their jobs. After Levi's closed its last American plant, Rajghatta said that if it had kept making all its jeans in the United States, a pair would sell for $80.

"Would Mr. Average Joe buy it? Nope. He will head for Wal-Mart to pick up his $12-a-pair jeans, made in Anywhere-but USA, where they pay the locals (Chinese, Indians or Thais) what seems like slave wages."

Some American business leaders say the threat of outsourcing to lower-wage countries such as India is being greatly exaggerated.

"The U.S. economy is resilient,'' said Rolf Lundberg, a senior vice president for public affairs with the U.S. Chamber of Commerce. "There have been waves of anxiety about job losses that have passed over us before. The great sucking sound of NAFTA (the North American Free Trade Agreement) ...turned out to be essentially just noise."

It is also important to see the number of jobs moving offshore in the context of the total U.S. job picture, others say.

The consulting firm, Forrester Research, Inc., estimates that 3.3 million U.S. service industry jobs and $136 billion in wages will move offshore by 2015 in such diverse areas as management, business, computers, architecture, life sciences, law, design, sales and back-office work. More of these same jobs will move offshore from Japan, the United Kingdom, Germany and other industrialized countries, it predicts.

Deloitte Research anticipates that the "trickle" of financial firms that use offshore locations will "soon be transformed into a flood" that could involve the movement of 2 million jobs over five years, including 850,000 from the United States.

But even though those numbers sound alarming, they represent a relatively small slice of the 131 million people employed in the United States, which creates and destroys millions of jobs every month.

Not only that, but a recent study by the Institute for International Economics found that in the job categories that Forrester Research said are vulnerable to outsourcing, the biggest job losses between 2000 and 2002 in the U.S. came in the manufacturing sector, which has been slumping for years. The number of U.S. jobs in the services sector, which accounts for nearly 80 percent of the workforce that Forrester said could be outsourced, actually grew slightly in those two years, according to study author Jacob F. Kirkegaard.

Far from a sweatshop
Infosys, located 8,426 miles from Pittsburgh, has blossomed in the past decade not just because of outsourcing, but because India's government has dismantled decades of socialist-style controls on business.

It's one of a handful of Indian companies in its field that is approaching $1 billion in annual sales -- and it's certainly no sweatshop.

Young employees-- their average age is 26 -- work in brightly lit cubicles, hunched over computer screens in quiet discussions, giving a visitor the impression of being transported to California's Silicon Valley. Infosys regularly wins awards for being one of the most admired employers in India, and last year it received 1 million job applications for the 9,000 positions that it filled.

Starting pay for a new college graduate at Infosys is just $4,500 a year.

That may be puny by American standards, but it's attractive in India, where the average annual income -- including agrarian villages -- is about $500. Many of the new high-tech workers in India are making more than their parents did after a lifetime of work.

When Mellon Financial chose Infosys to take over software development work that previously had been done in Pittsburgh, it was following the lead of competitors such as Bank of America, American Express, JP Morgan Chase, Citigroup and Goldman Sachs.

Like many other corporations involved in outsourcing, Mellon is reluctant to publicly discuss the move, but Chairman Martin McGuinn told employees last August that outsourcing has "reset the cost structure" in the financial services industry, making it a necessary competitive strategy.

Mellon is satisfied with the work done so far by Infosys and said through spokesman Ron Sommer that it is "on track" to reduce its information technology costs by 30 percent as a result.

Although it acknowledges that using Infosys has led to layoffs in Pittsburgh, Mellon declined to say how many jobs were lost, arguing it would be "virtually impossible" to isolate them from other job reductions.

Affluence amid poverty
Infosys and its fellow companies in the office park known as Electronic City are an oasis of prosperity amid persistent pockets of poverty.

It dramatizes the fact that India's high-tech boom, even with an estimated 700,000 computer software professionals, still involves fewer than one-tenth of 1 percent of the nation's more than 1 billion residents.

The 45-minute drive from the center of Bangalore to Infosys highlights the city's affluence and its destitution.

Amid constant honking, motorbikes and three-wheeled auto rickshaws jostle with crowded cars, trucks and buses -- none paying heed to traffic warnings or lane markers. The traffic bumps past dirt sidewalks filled with push carts and peddlers selling fruits, vegetables, sheep, pottery and carpets. Squatters live in tents made of blue plastic tarps and cook their meals on small wood-fueled fires.

Long-time residents of Bangalore complain about how the doubling of the population in recent years has strained the city's infrastructure.

Hotel rooms are at a premium as U.S. and European business executives swarm all over the city. Mahatma Gandhi Road is packed with shopping outlets and neon-lit night spots where many of the young tech workers go after their shifts end.

Because municipal power is unreliable -- often shutting down without warning in the afternoon -- the new technology businesses are built as self-contained enterprises with their own backup generators and redundant computer systems. Unwilling to rely on public transportation, large call centers employ fleets of vehicles that pick up their workers at home and return them at shift's end.

Shopkeeper Sachin Jain, who runs Cottage Crafts Emporium in Bangalore, has a collection of hundreds of business cards from Western executives who have come to his store looking for silk, carpets, Indian dresses and sandalwood carvings. The familiar names tumble from his wallet: Dell, General Motors, Accenture, Microsoft, Fidelity Investments, Deutschbank, Citibank.

And while new jobs have gone mostly to the educated, Jain said others have benefited indirectly.

Government, for example, has seen its coffers grow from increased taxes and is moving to upgrade services. A subway and a new international airport are being discussed.

Jain said his own revenue has improved by about 30 percent a year for the past several years, allowing him to raise salaries for a staff that opens doors for customers and patiently folds and unfolds silk fabrics and rugs.

"Our living standards have gone up, and that's not the only thing that has changed. Before, we used to be scared of investment -- to buy a new car or a new house. Today we are making a new life," Jain said.

How long-lasting will this boom be?

Or, as University of California professor Martin Kenney put it at a recent Washington D.C. conference, will outsourcing be a 2-foot wave or a tsunami?

Kenney didn't know the answer.

There are geopolitical issues that could mitigate the trend, he said. A war between Pakistan and India, for example, could endanger future expansion plans, even though Bangalore and other IT centers in India are far from the border of the two countries.

"Things could change on a dime,'' he said. "Who predicted 9-11? Who predicted there would be war in Afghanistan and Iraq?"

On the other hand, Kenney said the types of jobs that conceivably can move offshore are "incalculable" and the kinds of facilities they require can be quickly built and expanded.

During his own three-week research trip to India, Kenney said he would return from his daily interviews, thinking:

"Oh my God, what's going to happen to my students?"

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Tomorrow: Who wins and who loses?