San Jose Mercury News, Mon, Sep. 06, 2004              

Indo-American in maelstrom of offshoring controversy 

By KARL SCHOENBERGER, Mercury News 

As the debate about offshoring intensifies in California, Vivek Paul watches from the eye of the storm. 

The Indian-born naturalized U.S. citizen, who cut his teeth as a manager for Pepsi and General Electric, has transformed Bangalore-based Wipro Technologies from a modest $100 million Indian software contractor in 1999 into a $1.2 billion offshoring juggernaut today. 

His position as Wipro's chief executive and vice chairman gives him a unique perspective on the political brouhaha over offshoring, as widespread concern about lackluster job growth has become a major election-year issue. Companies like his are accused of sending service jobs to cheap labor markets in India and leaving a trail of joblessness behind. Wipro and its major Indian rivals, Tata Consultancy Services and Infosys Technologies, are loathed by labor activists for exporting high-paying jobs, importing tech workers on temporary visas and allegedly driving down local wages. 

The 45-year-old Paul, a graduate of India's Birla Institute of Technology who earned a master's degree in business administration from the University of Massachusetts, is an unapologetic believer in the virtues of making U.S. companies more efficient through offshoring -- an activity that at the same time helps raise living standards in his impoverished homeland. But he also expresses compassion for the American workers who lose out in the bargain. 

``If we can unlock all the brains of the world to work together in a smooth, collaborative way, we can do nothing but benefit,'' said Paul, whose baritone lilt reveals his Indian origins. ``But we've got to figure out how to manage our way through this transition. We've got to take care of the people who are disenfranchised, because one person suffering is one person too many. We need to expand unemployment benefits, not cut them back. We need to give more incentives for retaining.'' 

Paul lives with his wife and three young children in Los Altos, working out of the company's U.S. sales office in San Carlos about a third of the time. He splits the rest of his time on the road managing Wipro's global operations and running the company out of its headquarters in Bangalore. Tall and trim, he is an inveterate jogger and swimmer who says he avoids playing golf with business associates. 

``People ask me how I manage to run the business when I'm here,'' said Paul, who oversees a workforce of 33,000 engineers and consultants, spread out from North America to Europe, India and Japan. ``It demands enormous concentration. I get 19 direct reports every day, and it requires a lot of management discipline to make sure the business is on track.'' 

A role model

Paul, a strict vegetarian of Brahmin heritage, pays homage to Jack Welch, the former chairman of GE whose no-nonsense management philosophy influenced his career. He spent 10 years with GE, the first six in India managing the company's ultrasound products made in a joint venture with Wipro. Then he ran GE's CT scan business out of Milwaukee. 

``He certainly has that edge, the willingness, to make the decisions that need to be made and get the results,'' said John Trani, Paul's former boss at GE Medical Systems. ``He was more American than Indian, an American Indian, and you don't find many of them.'' 

When Azim Premji, chairman of family-controlled Wipro, asked him in 1999 to take the reins and turn the company into a major player in the booming offshoring industry, Paul could not resist the challenge. Wipro, which started out making salad oil, is listed on the New York Stock Exchange. In the quarter ended June 30, revenues from global information-technology services grew 47 percent, to $294 million, sending projected annual sales above the $1.2 billion mark. In July, the research group IDC ranked Wipro No. 1 among offshore service providers. U.S. sales account for 61 percent of Wipro's business. 

In a recent interview, Paul talked about an ominous ``push back'' against offshoring that he thinks may have suppressed U.S. sales growth because bad publicity repelled new customers. The anti-offshoring wave has culminated in three bills that passed the state Legislature last month and are awaiting action by Gov. Arnold Schwarzenegger. 

One of them, sponsored by Assemblywoman Carol Liu, D-Pasadena, would bar state agency contractors from doing work outside the United States. Another, sponsored by Sen. Liz Figueroa, D-Fremont, would mandate that state privacy laws apply to medical and financial information processed overseas. A third bill, written by Sen. Joe Dunn, D-Garden Grove, would restrict sending work overseas if it involved homeland security. 

Liu's bill ``is about optics, not substance,'' said Paul, who is on the board of the California Chamber of Commerce, the bill's strongest opponent. ``Very few of the state agencies outsource to India anyway, so it would affect an infinitesimally small portion of what they do and what we do. But it's a bad precedent, because the government would be taking a bigger role in telling agencies how to spend money.'' 

Protecting the privacy of medical and financial information that goes overseas in service contracts has been another issue for offshoring critics like Figueroa.

Wipro and the New Delhi-based National Association of Software and Service Companies, Nasscom, an influential trade group, have been working with officials in the Treasury Department to develop safeguards, Paul said. 

``We already have solutions where we can do data masking, and strip the name and the Social Security number,'' he said. ``It's a question of the customer's comfort level. E-Loan, one of our clients, did an experiment and gave customers the choice, telling them, `press 1 if you want your loan processed in India in one day, or press 2 if you want your loan processed in the U.S. in three days.' And 70 percent of the people who called in pressed 1.'' 

Privacy concerns

Critics say India's weak judicial system compounds the dangers of privacy violations because security breaches can go unpunished, but Paul said such risks are exaggerated.

``There's nothing that says that just because you're within the political boundaries of the United States that your privacy processes are better,'' he said. ``I can tell you that our privacy compliance is better than most outfits that people outsource to here in this country.'' 

Paul concedes there are legitimate concerns fueling the backlash against offshoring. He bemoans the reports of U.S. technology workers who are forced to train their Indian contractor replacements before losing their jobs. 

``There were a couple of companies that did this `train your successor or we won't pay your termination benefits,' and I think they did a great disservice to the entire industry,'' he said, adding that to his knowledge, Wipro was never involved in such a case. 

Misuse of the temporary H-1B and L-1 visas is another area of concern, said Paul, who was in the country on an H-1B visa while Pepsi, his first employer after he finished his MBA in 1982, sponsored him for green-card immigration status. Wipro, which is rotating employees into the country to work on-site at companies where it has offshoring contracts, relies on the temporary, non-immigrant visas. 

``We're completely complying with the law,'' Paul said. ``It's not like we're coming here and robbing your banks.''