Outsourcing on the Outs

  As 2004's winter turned into spring, outsourcing to foreign countries had become America's latest bogeyman. John Kerry, the presumptive Democratic presidential nominee, compared companies that move American jobs overseas to
  Benedict Arnold. But the bashing of outsourcing is a bipartisan affair as many Republican politicians have joined the protests.
  Unfortunately, much of today's outsourcing debate completely ignores the complexities of the issue. Terms like "comparative advantage" just don't cut it on the late-night news.
  The payment card business is no stranger to the outsourcing of tech jobs that only recently became a source of anxiety because of nation's anemic job growth. Take MasterCard International. It began outsourcing software
  development to India in 1998, according to Robert Reeg,
  senior vice president of systems development at MasterCard's
  primary operations center in O'Fallon, Mo., near St. Louis.
  At the time, MasterCard wasn't looking for Indian
  engineers who would happily work for one-sixth the pay of their American counterparts. MasterCard wanted to hire in St. Louis, but there weren't many qualified Americans around. "You couldn't find programmers because of all the
  Y2K stuff," says Reeg, adding that the dot-com economy was in full swing. "It was a resourcing issue. We had some huge development issues of our own going on."
  Rather than put its network improvements on hold, MasterCard established a beachhead in India and in 2001 forged a joint venture with a Princeton, N.J., firm headed by an Indian native. The venture, MPact Technology Services,
  is 49% owned by MasterCard and currently employs 170 people in Chennai (formerly Madras) on India's southeast coast. By mid-year, 200 of MasterCard's 750 software developers will be in India. But 80% of MasterCard's total of about 2,000 information-technology staff members are based in the U.S.
  The programmers in Chennai develop code for MasterCard's
  worldwide authorization and settlement network and work closely with MasterCard colleagues in St. Louis, Belgium, and Sydney, Australia. These highly dispersed workers communicate using video teleconferencing, instant messages
  and e-mail. "You do have to spend more time in communication," Reeg says.
  MasterCard, an international firm for decades, hasn't experienced some of the horrors that novice U.S. outsourcers have encountered when they've tried to set up shop in India. One downside is that managers from St. Louis must make the
  long trip to India, 11 time zones away, to keep a hand on things. Reeg goes a couple of times a year and one of his top managers goes four or five times.
  But the Indian programmers do quality work, according to Reeg. And to him, the simplistic campaign potshots against outsourcing don't make a lot of sense.
  "We are a global company," he says. Having programmers on several continents "is the best way to get the job done."
  By the way, MasterCard added 110 IT jobs in St. Louis last year.