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Globalization: Behind India's technological boom

The rise of outsourcing by Western companies stifles local innovation, learns Andrew Robinson.

Dead Ringers: How Outsourcing is Changing the Way Indians Understand Themselves

Princeton University Press: 2011. 288 pp. £24.95 9780691147871 | ISBN: 978-0-6911-4787-1

It is now an everyday experience to phone a large US- or UK-based company with a technical, financial or administrative enquiry and end up talking to someone in Bangalore or Mumbai. India's ready supply of well educated, English-speaking and relatively cheap workers has made the country a top destination for many Western companies, from banks and airlines to big pharma and information technology (IT) firms. Yet the outsourcing of labour has had unforeseen local impacts on science and innovation — and on the technologically gifted young people of India.

Dead Ringers, by US sociologist Shehzad Nadeem, is the first academic field study to explore what turns out to be an occupational dead end for hundreds of thousands of Indians working for Western corporations. As well as the multitude who man telephones, this vast group includes an army of software programmers, accounting specialists and interpreters of medical scans. Nadeem interviewed more than 125 workers, managers, employers and trade unionists in India and the United States, mainly in 2005–06. He offers concrete and important insight into the world of outsourcing, but in highlighting the downsides, he downplays the undeniable successes and the homegrown roots of India's research and development sector.

India's IT boom, which started in the mid-1990s after the liberalization of the Indian economy in 1991, has generated headlines and hyperbole in both business and politics. As Nadeem readily accepts, outsourcing has provided many young Indians with comparatively well-paid opportunities and it has boosted India's reputation internationally. In 2004, the boom even contributed to the electoral slogan of the ruling Bharatiya Janata Party (BJP), “India shining”.

The time difference with the West takes its toll on a web tutor at an Indian-based company. Credit: U. SINAI/GETTY

But the BJP's controversial phrase turned out to be ill chosen. The party lost the general election, and the IT boom began to lose its shine, especially after admissions of false accounting in 2009 led to the collapse of Satyam Computer Services, which in 1999 was one of the first India-based IT companies to be listed on the NASDAQ stock market. It is now widely recognized that the 1990s dream of Indian development led by outsourcing was, in Nadeem's words, “wildly oversold”.

“The brave new IT world documented in Nadeem's interviews disturbs more than it shines.”

The offices of India's glamorous IT companies may look “like twinkling towers of innovation”, says the author. But he contends that “like plastic fruit, they are imitations”. Nadeem backs up this view with skilfully told stories from his Indian sources (some named, most anonymous). But when he tries to uncover the reasons why India's IT industry has generally failed to innovate at home, despite prominent individual successes among Indians in California's Silicon Valley and Western academia, his conflation of outsourcing with research and development blurs his analysis and conclusions. The book is also heavy on academic jargon.

Creativity curtailed

What does he think is stalling homegrown innovation? A lack of emphasis on individualism in Indian family life and a widespread deference to authority may be part of the reason, says Nadeem. But much more important, he says, is the global economic system. Outsourcing managers, both in India and the United States, are “locked in a contradiction”, he notes. They want their workers to mature into professionals who show initiative and take responsibility for projects. But simultaneously, they want to migrate easily replicable, standardized tasks rather than whole projects to India. Farming out tasks generates a reliable stream of revenue while ensuring that control of the process remains based in the United States and Europe. The core work requiring creativity therefore stays in the West.

Nor have these elite industries been effective in alleviating India's massive poverty, Nadeem argues, despite generating impressive economic growth. Between 1994 and 2008, India's export revenues in IT and IT-enabled services (ITES) grew from less than US$0.5 billion to $40.4 billion, and are predicted to reach $71 billion in 2011. Between 2004 and 2008, the number of workers employed in the sector — most of whom are male and in their twenties — more than doubled, to an estimated two million. Their average entry-level salary in IT in 2006 was $5,715 a year (compared with $46,194 in the United States). By 2007, India's IT and ITES industry accounted for 5.2% of the country's gross domestic product. Yet, the IT and ITES workforce — which is frequently located in deregulated special economic zones that are cut off from their surroundings — constitutes less than 0.5% of India's total workforce of some 450 million, 92% of whom survive as labourers, farmers and street vendors. According to a 2007 Indian government report, 77% of Indians live on less than 50 cents a day. In 2010, only 366 million Indians had access to modern sanitation (for comparison, India has 564 million mobile phones).

Nadeem gives vignettes of life in four unnamed outsourcing companies in Bangalore, Mumbai, Chennai and New Delhi, where long hours, graveyard shifts and stressful monitoring regimes without doubt damage the workers' health. These snapshots, combined with the start-ups that have failed to live up to their promise, and widespread corruption in Indian business and politics, give the 'dead' in Dead Ringers — which initially refers to call-centre workers' dubious mimicry of Western accents — a more ominous significance as the book progresses.

Nadeem concludes that outsourcing is a new form of colonialism, with an insidious appeal for young Indians in thrall to American mass consumerism. Although that is essentially true, his simple explanation skirts the internal impetus that has been given to Indian technological innovation. After India became independent in 1947, its first prime minister, Jawaharlal Nehru, did much to establish the country's scientific higher-education system, including the Indian Institutes of Technology, and to build up its technological sector, on which the success of the IT industry rests. Nadeem neglects this crucial background and seems to endorse an unnamed Indian executive's dismissive comment: “The only thing that Nehru gave us was education. That allowed people to be in a good position when the knowledge boom came.”

There is more variety and originality in Indian IT than Dead Ringers implies. Nonetheless, for all the wealth and political prestige that outsourcing has brought to India, one cannot help agreeing with the author that the brave new IT world documented in his interviews disturbs more than it shines.

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Correspondence to Andrew Robinson.

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Robinson, A. Globalization: Behind India's technological boom. Nature 472, 34–35 (2011).

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