Rana Dasgupta - Capital - The Eruption of Delhi

It is no coincidence that such thinking arose in a formerly closed and state-controlled economy. The entrepreneurs who emerged from that environment were full of revolutionary zeal, and took great pleasure in erasing the national boundaries that had hemmed in their childhoods — to an extent, in fact, that unnerved many of the Americans and Europeans who subsequently found much of their lives administered from the other side of the world. These entrepreneurs were intelligent iconoclasts who believed in technology and corporations, and hoped to use the power thereof to overturn nearly everything of the India that had existed before 1991. And yet they were Indian, and when they looked at the world of American business they did so with a foreign, unaccustomed eye. “How is it they have never thought of doing it like this?” they said to themselves, and went on to change things.

Perhaps it helped that they came from a land where trading families had for centuries spread their members out to different places on the planet in order to spot the commercial gradients between them. When one talks to members of these families, even those who are highly parochial in their personal habits — arranging only intra-caste marriages for their children, for instance — one often discovers an astonishing indifference to location and distance. It is precisely the regimented nature of their family structures, in fact, that frees them to such a flexible and unsentimental relationship to place. There are no facts except cost and revenue, and if the latter exceeds the former then the deal is good, no matter how bizarre the geographical effects.

Not entirely coincidentally, this Indian form of globalism was unleashed just at the moment when it could merge with another major transformation in the global economy. American corporations had spent the previous decade moving manual work overseas, both as a cost-reduction exercise and as a political assault on American workers, who enjoyed more bargaining power than the far-flung characters who increasingly laboured in their stead. This idea of the globally dispersed, low-friction corporation had a heroic appeal to American — and many European — boardrooms of the time and, as new communications technologies began to erode the information distance between one place and any other, it was natural for them to ask if there were other, non-manual, functions that could be moved overseas, with similar financial and political gains. Since many of these functions demanded large numbers of English speakers, India, with its much lower cost base, was an obvious place to look to. Using Indian, instead of American, software developers showed that the idea had great potential, and the stage was set for American corporations to start breaking off parts of their own internal operations and sending them in the same direction.

The other factor in the emergence of Indian business process outsourcing was the existence, just outside India’s capital city, of an enormous zone of high-tech real estate where all these chunks could land. This was the new suburb of Gurgaon. DLF, the real-estate company behind the development, had been slowly buying up plots of farmland to the south-west of Delhi since the early 1980s. When the restrictions on foreign companies coming into India were lifted, this territory revealed a value beyond imagination. Gurgaon supplied the essential infrastructure to a major realignment of global corporate forces. Bordering Delhi in the neighbouring state of Haryana, it was conveniently close to the capital’s international airport and was far preferable to corporations than anywhere in Uttar Pradesh, the other neighbouring state, which was known for its criminal activity. By the end of the 1990s, corporations were setting up there in droves, many of them moving out of the land-choked corporate capital, Mumbai, to do so.

The trigger for this incredible rush to the Haryana brushland had come with the announcement by General Electric, the world’s seventh-largest corporation, that it would set up a new operation in Gurgaon. Named GE Capital International Services, the new entity would run global back-office operations for GE Capital, GE’s finance company. In 1996, Raman Roy got a call asking if he would be interested in further developing his experiments at American Express at ‘GECIS’. He went to Delhi’s Oberoi Hotel to discuss the prospect with the president and CEO of GE Capital, Gary Wendt.

In an era of dazzling corporate energies, Wendt was a prime mover who understood the radical opportunities associated with global deregulation. At the beginning of his command, GE Capital had no operations outside the United States: by the time he came to Delhi it was spread over forty-five countries. Under Wendt, financial services had become the largest and most profitable part of the General Electric group, overtaking every other division of what was, in its origins, a manufacturing company. He had achieved this in part because he was an operational genius who understood how costs and revenues could be entirely restructured in the global era.

“That guy was a maverick,” says Raman. “He was so quick to realise the potential of what we’d done at American Express. He asked me, ‘What do you think we’ll lose if this thing doesn’t work?’ I added 3 million to the number we’d already talked about and said ‘$10 million.’ ‘Fine,’ he said. ‘That’s loose change. I’m going to put the money into an account for you and nobody will ask you how you spent it. Just set up something like you did at American Express.’ Without him it never would have happened. I would never have got approvals for the enormous money I paid for satellite dishes and everything else.” 5

Raman had been working at the rock face of outsourcing for a decade when he arrived at GECIS and he had a more detailed conception than his American bosses of where this line of enquiry could go. In 1998, he set up a makeshift experiment in the Gurgaon office. It was India’s first international call centre. Sitting in that office, workers handled credit card customer service calls from the United States. His fellow board members at GE in India had expressly forbidden him to pursue this experiment, so he concealed it from them and invited Gary Wendt to come and have a look.

“It was modelled on one of those old hairdressing shops. I rigged up curtains to separate the workers. If my colleagues had seen what I was doing I would have been fired. There was sensitive information on the screens and the whole thing was very ramshackle. I had no budgets — I started with just twenty people.

“When Gary Wendt came to visit he looked at this hairdressing shop and he was stunned. I can still see him coming down the stairs and shaking his head. He said, ‘I don’t think you understand what a revolution you’ve started’. He went away and became an evangelist for it in GE. Our cost per unit was less than 50 per cent of the existing and our quality was higher. In the US they were employing school drop-outs; we were employing people with college degrees. Before long we were providing services not just to GE Capital but to the whole General Electric group.

“It required massive lobbying to get to that point. International telecommunications were still a government monopoly, and the government was suspicious. When I went to ask for international bandwidth for that first hairdressing shop they thought I must be involved in espionage, because no one had ever requested that much capacity before. And though it was possible to rent a private international line, it was illegal to connect it to any public network, which would bypass the government monopoly — the fine was something like $150,000 per day. It took us eight months to get an exemption from that, and even then they only gave us permission for a pilot. They didn’t comprehend what we were doing. We had to print out definitions of call centres from the internet and show them to government officials so they would understand what we were trying to do.”