Hyderabad: A Third World Cyber-City

By Amin Sharif 

On Thanksgiving Day morning, while other television channels were preparing for football or commenting on the Macy Parade, CNBC was airing an extensive documentary on India’s Third Word “cyber-city”-Hyderabad. This documentary, entitled CNBC in INDIA was about why high-tech corporations such as General Electric, IBM, Microsoft, Dell, and Oracle have descended on this East Indian city. And the disastrous result this decision portents for the American workforce: the lost of possibly millions of jobs and the continued erosion of the American standard of living.

The culprit that is leading to this loss of jobs and the continued erosion of the American standard of living--as this documentary points out--is outsourcing or the global movement of American and other Western corporations away from their own domestic workforce to cheaper overseas labor markets. India, which for decades has possessed a tremendous number of highly skilled, less expensive workers is but the first of many Third World countries who will benefit from this practice.

Yet, even before these high-tech companies moved to Hyderabad in India, outsourcing had already become a problem for the American workforce. Foreign investment and outsourcing in places like South Korea, China and Bangladesh have for decades resulted in the flooding of the US market with cheap textiles. And it has been the entry of these cheap products into the American marketplace that has led to the demise of the textile industry in places like North and South Carolina. In Bangladesh, a textile worker may receive 80 cents a day for doing the same work that a Carolinian worker would receive $100 a day for. 

So for budget conscious corporations, outsourcing is a good policy. But, in the Carolinas, outsourcing has been particularly disastrous for their local workforce because many of the textile workers have traditionally been black and female (many of them the sole support of their families) with less than a high school education. The disappearance of these good paying jobs, over 138,000 since 1994, has all but ensured that many of these older women will never be employed again. And, that even younger women once employed by these large textile companies may never make a paycheck like the one they earned before outsourcing became an option for American companies.

And it is not simply jobs in low-tech industries like textile that are being outsourced. Hyderbad has become the center for the outsourcing of all kinds of high tech work from engineering, software development, service call centers, medical and financial analysis to the preparation of UNITED STATES TAX FORMS! And, all of this outsourcing has led to the raising of the standard of living in India and the decline of the standard of living in America. To illustrate my point, I have constructed a small chart of what jobs pay in India and the United States. The figures quoted are taken directly from CNBC articles (found on their website) related to India and the outsourcing of American jobs.                                

Still, despite what might seem to be low wages in America, outsourcing has allowed the 5.5 million inhabitants of Hyderbad to raise their standard of living to a level unheard of in the past. In CNBC’s documentary, Hyderbad comes off as a modern-even futuristic city. Its gleaming buildings display the corporate logos of almost all of the significant high-tech companies in America. At what seems to be high noon, thousands upon thousands of tan and brown East Indians spill out into the streets of the city. These are the young and enthusiastic makers of a new post-industrial future for India.

One can not help but contrast this image of urban vitality with the decaying, financially strapped cities of America. To be sure, not all of India is as prosperous as Hyderbad. Much of India is still poverty-ridden, diseased, and trapped in a feudal past. Yet, it is precisely because Hyderbad has transcended these conditions that make its progress all the more astonishing. What Hyderbad represents to the common East Indian is the hope and promise that all of India can transform itself into a viable post-industrial society. And Hyderbad had sent a clear message to the workers and their unions in America: the future of labor is to be found in the East! 

It is clear from the figures posted above that the American workforce has lost its competitive edge in the new global, post-industrial marketplace. Moreover, there seems to be no apparent way to reverse this trend that some estimate may result in the loss of some 3.3 million American jobs to places like India and China by 2015. 

Hyderbad is in a particularly good position to inherit jobs outsourced from America to foreign labor markets. As mentioned before, India has a highly educated workforce that is hungry enough to take on outsourced jobs at wages significant lower than, almost any, American worker would work for. And, India is rapidly training its workers to take advantage of the new global environment to seize even more American jobs.

In Hyderbad, a company called Wipro is training Indian workers to speak with “Midwestern American and working class British accents” in order to answer service calls for companies like Dell Computer Corporation and Oracle. These are entry level positions that would have once gone (in the American labor market) to high school graduates. Now, they are being done by East Indians who, as the chart above points out, make less money a year than an inner-city black high school student would make at McDonald’s in six months.

What is even more significant for American worker is that there are aggressive forces in India preparing its workforce not just to receive outsourced jobs but to develop their own version of California’s “Silicon Valley.” One has but to recall the negative effect that Japanese carmakers, Toyota, Mitsubishi and Nissan, had on the domestic automobile market to imagine what might happen to the American high tech companies if they must face competition from abroad. In less than a decade from the time Japanese cars entered the American market, their cars were considered to be a better value than their American counterparts. 

Two decades later, Chrysler, one of the Big Three automakers, was on the verge of bankruptcy and needed a massive federal loan ($1.5 billion in 1978) to keep it afloat. And as late as 2002, the American share of the global automobile market was reduced to 63.8% down from 73.5% in 1995. More importantly, hundreds of thousands of good paying jobs disappeared from the American economy. Many of these jobs would have been the gateway to a higher standard of living for young, working class Whites, Blacks, and Latinos who now suffer from high levels of unemployment. 

Even as this article is being written the Mayor of Baltimore and the Governor of Maryland are fighting to keep an auto plant open--not for decades, as would be once expected, but for a mere three years. Undoubtedly, these Maryland politicians can not read the handwriting on the wall that says the auto industry in America may never come back.

Just as the American automobile industry was shaped by Henry Ford and the American computer industry was shaped by visionaries such as Eric Raymond and Bill Gates, Indian has produced its own visionary and captain of industry-Rattan Tata. And, it is figures like Tata in the business sector and Chandrababu Naidu in the government sector that are fighting to make a place for India in the new global marketplace. Both men have far reaching visions of where India will be in the post-industrial era. Chief Minister Naidu, who according to the documentary has reached “cult” status in India because of his progressive development of Hyderbad, thinks in more domestic terms than his counterpart Tata. 

Naidu's concern is with raising the basic standard of living throughout India by the introduction of foreign business and the creation of other cyber-cities such as Hyderbad. He has legislated in a manner that seeks to wean India’s economy off the massive bureaucracy that India inherited from Great Britain. He is seeking to make India’s economy sleek, streamlined and responsive to the post-industrial environment. Yet, ironically, there are forces that are dead set against what Naidu is trying to accomplish. From conservative-protectionist political forces in Indian government to Maoist revolutionaries, Naidu has his share of enemies. The latter--the People’s War Group--had already tried on one occasion to assassinate Naidu.

But if Chandrababu Naidu has his visionary domestic concerns, Rattan Tata is thinking in the broadest of international terms. Tata is the 65 year old, Cornell educated mogul whose 85 operating companies have combined revenue of 11.2 billion dollars or an estimated 2.4 percent of India’s gross domestic economy. Tata dreams of integrating the productive power of the economies of India and China into a super-trading zone of over 2 billion people. According to Tata, India would be the high-tech (IT) side of the economic equation. China would, in Tata’s vision, represent the low-tech (manufacturing) side. 

If this vision could be realized this super economy would be in a position to challenge the economic, political and perhaps even military hegemony of the West. It is with this ominous presentation of an India-China threat to America that the documentary ends. There seems to be not the least desire to place what has happened in Hyderbad in any real context by the staff of CNBC-although they are to be commended for presenting as much information as they have. The viewer is left to apply their own understanding of the facts to the complex environment of a dawning post-industrial era.

But what the documentary leaves out is as important as what it seeks to present. America is facing every possible challenge imaginable. Terrorist attacks, increasing economic competition abroad threaten to drain the will and the economy of the American civilization. How will the American economic and political infrastructure survive these attacks? Not a clue of a solution is given by this CNBC documentary. But one thing is implied clearly in all that CNBC has presented-education and training is the key to any American future. For the reason why Hyderbad was chosen as a center for America’s high-tech corporations is simply put by Scott R Bayman-president and CEO of GE India, “. . . all these high tech companies have come to India to utilize . . . India’s huge intellectual talent.”

This need to develop “intellectual talent” is what America does not get. And, declarations by President Bush to the contrary will not suffice to erase the facts on the ground. Without “intellectual capital”, not only will every American child will be left behind but American hegemony in the world is sure to come to an end. What is needed in America is a sweeping new educational policy. A policy that says education is as much apart of the national security equation as weapons and treaties. It is a policy that says the inventory of America’s teaching staff is just as important as an inventory of America’s industrial might by the Wall Street.

For the poor and minority communities, this new policy to develop “intellectual capital” is as important-indeed in the long run-more important than fighting their traditional enemy of racism with civil rights type legislation. In the context of a new post-industrial society the content of one’s intellect may count as much, perhaps even more, as Martin Luther King’s celebrated character. But to bring such a policy about will require bold imaginative leadership.

Unfortunately, there is little of this kind of leadership to be found in America at this time. As Ron Waters recently pointed out, much of what passes for Black political leadership has repositioned itself to be more conservative, to effectively abandon the progressive politics of the past. Yet, what we need at this moment is a more radical, I suggest, even revolutionary Black leadership to bring forth the change necessary and champion the cause of the poor and minority people. Without this Black revolutionary leadership, American civilization can not be transformed. Without this leadership, all is lost!                           

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In addition to the IT industry, various biopharmaceutical firms have their operations in Hyderabad owing to its established Public sector in Life Science Research and Genome Valley. In 2008, the city's prime residential real estate reach the highest growth percentage in India. The city is home to the Telugu Film Industry, known popularly as Tollywood. Located at the crossroads of North and South India, Hyderabad has developed a unique culture that is reflected in its language and architecture.—Wikipedia

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updated 4 October 2007 / update 27 June 2008