Time Zones: India's Comparative Advantage

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Tech Workers nd Time Zones: Indi's Comprtive Advntge 28.1 lntroduction When people lose their credit crds or hve trouble with their computers, they need help fst. Usully they phone cll center.

They re prt of globl revolution in informtion technology (lt). IT is the use of technology to move, record, nd process informtion. Computers, stellites, cell phones, nd the Internet re ll prt of IT.

To outsource mens to hire someone outside compny to do work tht ws once done inside the compny. In recent yers, Americn compnies hve outsourced mny jobs to Indi.

This mens tht Indi cn offer some services more cheply or effectively thn competing countries. As result, compnies often look to Indi when they wnt to outsource jobs.

1 Tech Workers nd Time Zones: Indi's Comprtive Advntge 28.1 lntroduction When people lose their credit crds or hve trouble with their computers, they need help fst. Usully they phone cll center. Such centers hndle lrge numbers of phone clls for business. Often the cllers do not relize tht the cll center might be hlfwy round the world. Cll centers hve become big business in Indi. They re prt of globl revolution in informtion technology (lt). IT is the use of technology to move, record, nd process informtion. Computers, stellites, cell phones, nd the Internet re ll prt of IT. This technology llows us to tlk by phone to people lmost nywhere on Erth. It lso llows computers to move dt round the world in n instnt. IT mkes it possible for compnies to outsource cll center jobs. To outsource mens to hire someone outside compny to do work tht ws once done inside the compny. In recent yers, Americn compnies hve outsourced mny jobs to Indi. Indin workers now prepre tx returns, review medicl records, nd tutor students for U.S. compnies. Indi ttrcts these jobs becuse it hs comprtive dvntge over mny other countries. This mens tht Indi cn offer some services more cheply or effectively thn competing countries. As result, compnies often look to Indi when they wnt to outsource jobs. In this chpter, you will lern bout some fctors tht give Indi this dvntge. Wht fctors give some countries comprtive dvntge in the globl lt revolution? This illustrtion shows customer in the United Sttes communicting with worker in lndi, Both re prt of the globl lt revolution. lnformtion technology, such s communictions stellites, llows dt to move quickly nd cheply round the world.this helps people in distnt countries to work together, Keep this illustrtion in mind s you try to nswer the Essentil Ouestion. { An informtion technology cll center in Bnglore, lndi 409

An ltworker in lndi lndi is one of the world's poorest countries. But its economy is growing rpidly, in prl thnks to the lt revolution.

2 28.2The Geogrph ic Setting Indi is lrge nd vried country in South Asi. It hs gret mountins, rinforests, nd deserts. It lso hs mny lrge cities. Indi is bout one third the size of the United Sttes, but its popultion is more thn three times s lrge. With over one billion people, Indi is the second most populous country in the world. An ltworker in lndi lndi is one of the world's poorest countries. But its economy is growing rpidly, in prl thnks to the lt revolution. lt jobs like the one shown here re ttrctive to people becuse they py more thn most other work. The World's Lrgest Democrcy Indi is ruled by n elected government. This mkes it the lrgest democrcy in the world. Under Indi's constitution, ll Indins re equl. But Indins re not lwys treted eqully in Indin society. For thousnds of yers, Indin society hs been divided into mny groups clled cstes. The cste system ws rooted in ncient beliefs. People were born into the sme cste s their prents. The system fixed wht jobs ech cste could do. Upper cste people were priests nd wr:riors. They rn Indi. Lower cste people worked s frmers nd lborers. Tody the cste system is beginning to chnge. Members of the lower cstes re improving their position. But the cste system is still powerful force in Indin society. Indi is lso divided by religion. The two min fiths re Hinduism nd Islm. More thn three fourlhs of Indins re Hindus. Muslims form lrge minority. The two groups disgree on mny issues. At times, these religious conflicts led to violence. lndi's Mjor lt Centers INDIAN OCEAN lnformtion Tech nology Centers lndi's lt centers ttrct jobs from round the globe. The min hub of lt work is the city of Bnglore. More thn 5 million people live in this bustlinq lt center. A Fst-Growing Economy Economic problems lso trouble Indi. It is one of the world's poorest countries. More thn fourth of ll Indins live in poverty. Mny of the poorest people live on less thn dollr dy. At the sme time, Indi's economy is growing rpidly. One reson for this growth hs been the globl IT revolution. Indin businesses hve been quick to dopt this technology. They offer IT services t low prices. As result, they hve ttrcted jobs from mny foreign compnies. Another ttrction for Americn compnies is Indi's loction on the other side of the world. There is time difference of 10 or more hours between Indi nd the United Sttes. These differences in time zones men tht Indins re t work while Americns re sleeping. A time zone is n re tht uses the sme clock time. Americn compnies tke dvntge of these time differences by setting up night cll centers in Indi. During the dy, customers' clls my be nswered by centers in the United Sttes. At night, they re nswered by cll centers in Indi. In this wy, U.S. compny cn hve workers nswering clls round the clock without hiring night shift in either country. Indi's IT industry is spred cross the country. But its min hub is the city of Bnglore in southern Indi. Like Silicon Vlley, Cliforni's IT center, Bnglore ttrcts highly skilled people who re interested in new wys to get work done. 410 Chpter 28

) Geoterms comprtive dvntge the bility of one country to produce good or provide service t lower cost or more effectively thn nother country informtion technology (lt) the use of technology to move,

lnformtion technology hs mde it possible to outsource jobs to businesses in other cou ntries, time zone n re tht uses the sme clock time. Erth is divided inlo 24 stndrd time zones.

3 ) Geoterms comprtive dvntge the bility of one country to produce good or provide service t lower cost or more effectively thn nother country informtion technology (lt) the use of technology to move, record, nd process informtion. lt includes computers, communiction stellites, cell phones, nd the lnternet. outsource to hire someone outside compny to do work tht ws once done inside the compny. lnformtion technology hs mde it possible to outsource jobs to businesses in other cou ntries, time zone n re tht uses the sme clock time. Erth is divided inlo 24 stndrd time zones. Ech zone hs its clocks set to the sme hour nd minute. Time Zones Around the World Erth's MnyTime Zones The world hs been divided into 24 stndrd time zones. Ech zone covers bout 15 degrees of longitude nd represents t hour ofthe 24-hour dy. The United Sttes hs six stndrd time zones. lndi hs nonstndrd time zone. lt is hlf-hour off stndrd time. Note the lnterntionl Dte Line running through the middle of the Pcific 0cen. Trvelers who cross tht line going westtowrd Asi jump hed one dy on the clendr. When they cross the line heding estto the Americs, they lose dy. Tech Workers ndtime Zones: lndi's Comprtive Advntge 411

28.3 Advntge Fctor One: Low Wges In 2003, cll center worker t U.S. irline mde $46,000 yer. Sngit Ry did the sme job in Indi. She erned $6,000. This difference in py is one reson Indi ttrcts IT jobs.

$szo,ooo $0 Sources: ltllinttttion l{'eek, * l u inforrntionweek conr IiltcriltioDl Hctuld Tt irrr. ws\\ iht com Who Erns Wht This grph looks tthe verge py of Americn nd lndin lt workers ln 2003.$ In 2003, there were more people working in Indi thn the entire popultion of the United Sttes. By 2020,Indi is expected to hve the lrgest workforce in the world.

In 2003, there were more people working in Indi thn the entire popultion of the United Sttes. By 2020,Indi is expected to hve the lrgest workforce in the world.

4 28.3 Advntge Fctor One: Low Wges In 2003, cll center worker t U.S. irline mde $46,000 yer. Sngit Ry did the sme job in Indi. She erned $6,000. This difference in py is one reson Indi ttrcts IT jobs. Americn compnies tht outsource work to Indi cn sve money. lt Worker Slries, 2003 $80, I E soo,ooo EE? = s+o.ooo >.= =q 3? szo,ooo $0 Sources: ltllinttttion l{'eek, * l u inforrntionweek conr IiltcriltioDl Hctuld Tt irrr. ws\\ iht com Who Erns Wht This grph looks tthe verge py of Americn nd lndin lt workers ln Softwre engineers mke more in both countries. Cll center Sofhrure workers engineers A Lrge, Fst-Growing Workforce Indi hs lrge nd rpidly growing workforce. In 2003, there were more people working in Indi thn the entire popultion of the United Sttes. By 2020,Indi is expected to hve the lrgest workforce in the world. Lbor costs in Indi re mong the lowest in the world. This gives Indi comprtive dvntge in ttrcting IT jobs. Americn compnies cn cut their wge costs in hlf by shifting some of their work to Indi. Severl fctors ffect how much workers in Indi ern. One is the size of its workforce. With so mny people looking for work, competition for jobs cn be fierce. As result, Indins often ccept lower py thn workers in other countries. Another fctor is the low cost of living in Indi. Bsic goods like food nd clothing cost much less thn in mny other countries. Bnglore, in prticulr, is known for its low cost of living. This mkes it possible for mny Indins to enjoy high stndrd of living despite py tht seems low to Americns. lndin Workers Wnt lt Jobs Good py nd working conditions mke IT jobs ttrctive to Indins. In 2003, the verge Indin worker emed $530 yer. In contrst, computer progrmmer might be pid $10,000 or more. Cll center jobs my py hlf tht much. Mny IT compny workplces look like college cmpuses. They feture clen, modern buildings in prklike settings. Some hve stores, swimming pools, nd gyms for their workers. A plesnt work environment helps ttrct Indins to IT jobs. Of the thousnds of Indins who pply for cll center jobs, only bout 5 percent re hired. Most of those who do getjobs re college grdutes. An lt Gmpus in Bnglore lt compnies offer workers ttrctive workplces. More thn 13,000 people work t this compny cmpus in Bnglore. The compny provides them with food courls, lrge gym, nd smll golf course. 412 Chpter 28

/ Lerning Americn English This techer is helping cll center workers in lndi lern Americn English. The workers lern to spek with Americn ccents. They lso study Americn culture.

5 / Lerning Americn English This techer is helping cll center workers in lndi lern Americn English. The workers lern to spek with Americn ccents. They lso study Americn culture. Some even dopt nmes like Nncy nd Jim to sound more like Americns on the phone AdvntEe FctorTwo: English Spekers A techer is leding clss in Americn English. The students re cll center workers. They re lerning to spek like Americns. They wtch U.S. movies nd TV shows to pick up Americn ccents, expressions, nd slng words. Their skill in English is second fctor tht drives Indi's success in the IT business. English ls Widely Spoken in Indi People in Indi spek more thn 1,000 lnguges nd dilects. A dilect is version of lnguge tht is spoken in specific re. Hindi is Indi's ntionl lnguge. More thn two fifths of Indins spek Hindi t home. But lmost ll educted Indins lso spek English. Trders brought English to Indi in the 1600s. Gret Britin lter took over Indi nd mde it colony. British officils set up schools where Indins were tught in English. The schools helped trin Indins to work in government jobs. The British lso hoped tht the use of English would help unite Indi's mny linguistic groups. Indi gined its independence in By tht time, English ws widely spoken. Tody it remins the min lnguge of business. It is lso used for government business. In cities, mny prents send their children to schools tht tech in English. Mny college clsses re lso tught in English. English Skills Are Key Advntge About third of ll Indins spek some English. This gives Indi comprtive dvntge in ttrcting U.S. compnies. Indi cn provide IT services in English more effectively thn countries where little English is spoken. Becuse of Indi's colonil pst, Indins tend to spek English with British ccent. Tht is why some compnies re teching workers how to tlk with Americn ccents. They hope the trining will help workers communicte better with cllers nd clients in the United Sttes. Tech Workers ndtime Zones: lndi's Comprtive Advntge 413

28.5 Advntge FctorThree: Trined Workers Rjiv Johri is 16 yers old. He wnts to study computer science t top university in Indi, but first he must pss the college entrnce exm. To prepre.

Millions of Indins see eduction s their ticket to good job. This educted workforce is third fctor in Indi's comprtive dvntge over countries with less skilled workers.

But they lso crete products for use t home. This mn is holding n lndin invention. lt is smll, ffordble computer with lnternet ccess.

6 28.5 Advntge FctorThree: Trined Workers Rjiv Johri is 16 yers old. He wnts to study computer science t top university in Indi, but first he must pss the college entrnce exm. To prepre. Rjiv goes to test prep clss every dy fter school. He studies lte into the night. Ech morning he gets up erly to ttend nother test prep session before school. Rjiv is not lone. Millions of Indins see eduction s their ticket to good job. This educted workforce is third fctor in Indi's comprtive dvntge over countries with less skilled workers. Americn compnies send work to Indi becuse they know it will be done by well-trined workers. Homegrown Technology lndin lt compnies do lot of outsourced work. But they lso crete products for use t home. This mn is holding n lndin invention. lt is smll, ffordble computer with lnternet ccess. Devices like this my help bring the benefits of the globl lt revolution to poor lndins. lndi ls Leder ln Technicl Eduction Indi's educted workforce is no ccident. Indi puts lot of money into higher eduction. In2003, more thn 3 million Indins grduted from college. Mny of them were trined in technicl fields such s mth, science, nd engineering. By 2010, the number of Indins with college degrees is expected to double. Indi hs mde specil efforts to promote technicl eduction. In 1951, the Indin Institute of Technology, or III ws founded. Tody IIT hs seven cmpuses. It is rnked mong the best technicl universities in the world. Some of the world's top scientists nd engineers re educted there. Not All lndins Hve EqulAccess to Eduction Indin lw sys tht ll children up to the ge of 14 must go to school. In fct, only bout hlf of Indi's children ttend school to tht ge. As result, bout third of the popultion is illiterte. This mens tht roughly 350 million people in Indi cnnot red nd write. Why don't more children go to school? One reson is poverty. Mny poor children hve to work to help support their fmilies. They hve no time or energy for school. Another reson is cste. Mny Indins still link eduction to cste. People expect children who re born into high cstes to be well educted. They don't expect this for children born into low cstes. It is hrd enough for mny Indins to get bsic eduction. It is even hrder to go on to college. In 2005, only bout 6 percent of young people in Indi ttended college. And only frction of these students will grdute with degree in mth, science, or engineering. Technicl Eduction in lndi This grph shows the growth of engineering nd lt progrms in lndi over eight yers. During this time, the number of people enrolled in these technicl progrms more thn doubled, nd the number of grdutes nerly doubled. Engineering nd lt Progrms in lndi (g 6) , , ,000 Number of Students Sourcel At/iorl A r(u iotion of Solit re ncl \errite Cotttpttier, \!\!w nsscom org I 'tl Students enrolled i f, studentssrduted Chpter 28

lndi's Brin Drin nd Brin Gin In the pst, mny students with technicl degrees could not find the jobs they wnted ner home. Some left Indi to work in more developed countries, including the United Sttes.

Mny Indins who were working out of the country returned to join the boom. These IT professionls brought with them vluble business experience s well s specil skills.

7 lndi's Brin Drin nd Brin Gin In the pst, mny students with technicl degrees could not find the jobs they wnted ner home. Some left Indi to work in more developed countries, including the United Sttes. The result ws serious brin drin. This trend begn to chnge when the IT industry took off in Indi. New opportunities for people with technicl degrees opened up. Mny Indins who were working out of the country returned to join the boom. These IT professionls brought with them vluble business experience s well s specil skills. For the compnies they joined, the brin drin turned into brin gin. Some Indins lso returned home with money to invest in new compnies. This investment hs helped the Indin IT industry expnd. In fct, some Indin compnies hve grown so fst tht they now outsource jobs to IT workers in Chin. Computers for Kids These students re lerning bout computers t n lt exhibition in Bnglore. Not ll lndin children get good eduction. 0ne project in Bnglore is helping poor children lern howto red nd use computers. The project is pid for by some of the city's leding lt compnies Beginning tothink Globlly In this chpter, you red how Indi hs become prt of the globl IT revolution. You lerned bout three fctors tht give Indi comprtive dvntge over some other countries in ttrcting IT jobs from the United Sttes. The first is low wges. The second is English spekers. The third is n educted workforce. In ddition, Indi is locted in time zone hlfwy round the world from the United Sttes. As result, Indins work while Americns sleep. All these fctors hve led U.S. compnies to outsource work to Indi. Outsourcing is only one wy tht compnies do business in nother country. Another wy is through foreign investment, or investment by person or compny bsed in nother country. Mny people nd businesses round the world invest money in the United Sttes. This money is used to buy U.S. compnies. It is lso used to strt new businesses in the United Sttes. In the next section, you will red more bout foreign-owned compnies in the United Sttes. You will lso explore this country's comprtive dvntges in ttrcting business from round the world. Tech Workers ndtime Zones: lndi's Comprtive Advntge 415

28.7 Globl Gonnections Foreign-Compny Jobs in the United Sttes,2001 The United Sttes loses jobs when they re outsourced to other countries. But it gins jobs when foreign compnies invest here.

ls the number of Americns working for foreign compnies rising or ffling? In 1987, bout2.6 million Americns worked for foreign-owned compnies.

Wht kinds of jobs re creted by foreign-owned compnies in the U.S,? Americns working for foreignowned compnies do ll kinds of jobs. They build crs, irplnes, nd medicl equipment.

8 28.7 Globl Gonnections Foreign-Compny Jobs in the United Sttes,2001 The United Sttes loses jobs when they re outsourced to other countries. But it gins jobs when foreign compnies invest here. The mp shows where compnies owned by foreign investors were doing business in the U.S. in The grph shows foreign investment in the U.S. between 1994 nd The U.S. ttrcts so much foreign investment becuse of its mny comprtive dvntges. ls the number of Americns working for foreign compnies rising or ffling? In 1987, bout2.6 million Americns worked for foreign-owned compnies. Since then, the number hs more thn doubled to over 5 million. The newjobs creted by foreign investment help to mke up for jobs lost due to outsourcing. Wht kinds of jobs re creted by foreign-owned compnies in the U.S,? Americns working for foreignowned compnies do ll kinds of jobs. They build crs, irplnes, nd medicl equipment. They do reserch nd develop new technologies. In generl, Americns working for foreign compnies errr more thn those working for U.S. businesses. Wht gives the U.S. comprtive dvntge in ttrcting foreign businesses? The U.S. is highly developed country. It hs mny skilled workers. It hs highly educted IT professionls, engineers, reserchers, nd businesspeople. Foreign compnies invest here to tke dvntge of this tlented workforce. The U.S. lso hs very high per cpit GDP. Mny foreign compnies strt businesses in the U.S. to be close to its nerly 300 million consumers. p(j A \L s oq--'. ov Three Foreign-Owned Compnies in the U.S. Loction of Prent Compny U.S. Loctions Dssult Flcon Jet Corportion Frnce Arknss, Delwre, New Jersey Business Activities mnufcturing jet irplnes sles nd service Why Prent Compny Invested in the United Sttes skilled workers tlented engineers close to customers the Americs n 416 Chpter 28

Number of Foreign- Compny Jobs Over 200,000 l--l so,ooo-zoo,ooo Below 50,000 Foreign lnvestment into the United Sttes 0 150 300

org/insourcing/ 96 E(E 6J= -v,,?= q)=.9 cn EE E.9 =!

J, U S DeprtmenL oilbor, www bls go! Phillips Medicl Systems Netherlnds Msschusetts o mnufcturing medicl equipment.

sles nd services skilled workers tlented engineers nd medicl rese rch e rs close to Norlh Americn customers Americn Hond Motor

9 Number of Foreign- Compny Jobs Over 200,000 l--l so,ooo-zoo,ooo Below 50,000 Foreign lnvestment into the United Sttes mlles kilometers Albers Conic Equl-Are projection Sottce: Orgdni:tioil lor Interntionl Invsrrcrl, www ofii org/insourcing/ 96 E(E 6J= -v,,?= q)=.9 cn EE E.9 =!OE $350 $300 $250 $200 $1 50 $100 s50 $ Yer Sourcer U.S. Bilftuu of htbor Stotirli.J, U S DeprtmenL oilbor, www bls go! Phillips Medicl Systems Netherlnds Msschusetts o mnufcturing medicl equipment. reserch nd development of new products. sles nd services skilled workers tlented engineers nd medicl rese rch e rs close to Norlh Americn customers Americn Hond Motor Gompny Jpn Albm, Cliforni, Colordo, Georgi, Michign, North Crolin, Ohio, South Crolin,Texs mnufcturing crs, motorcycles, ATVs, bots, engines reserch nd development of new products sfety eduction sles skilled workers tlented engineers nd designers close to North Americn customers Tech Workers ndtime Zones: lndi's Comprtive Advntge 417

Shanghai University of Electric Power (SUEP)

Shanghai University of Electric Power (SUEP) Shnghi University of Electric Power (SUEP) Shnghi University of Electric Power, founded in 1951, is full-time institution of higher eduction, co-run by the centrl government nd Shnghi Municiplity, nd mnged