DENNIS ODA / DODA@STARBULLETIN.COM
Indian software experts Pradip Pradhan, left, and Shekar Krishnan are working for AIG in Honolulu.
AIG experiments
in reverse outsourcing
It seems like a computer glitch.
As a growing number of American companies outsource work to cheaper countries, insurance firm AIG Hawaii has turned that trend on its head by bringing a team of Indian software experts to its Restaurant Row headquarters.
They have come to help launch a new technology wing at the company in a case that illustrates both the challenges and opportunities afforded by cross-border outsourcing.
AIG's local technical development operations had been on the chopping block as its mainland corporate headquarters sought ways to consolidate some functions in the giant company, said AIG Hawaii president and CEO Robin Campaniano.
Effectively, the Hawaii operations were going to be outsourced to the mainland.
"The problem is, once you start that it's a slippery slope," said Campaniano. "If they think we're too small to have our own development center, then the same questions could have been asked about accounting, underwriting, HR and other departments."
To avoid that, Campaniano used the Act 221 high-technology tax credit for new enterprises to set up a new operation called the AIG Hawaii Development Center, which now competes with six other such AIG centers around the world for software development and database management projects both in-house and from outside the company.
The move has saved 25 jobs and added another 10, Campaniano said. But to make the operation truly viable, AIG had to call on the same sort of Indian computer expertise that has caused many American technical jobs to flow East.
The six Indians now working for AIG Hawaii are here for at least a year to train AIG's local workers in Java programming language and to implement a more advanced technology platform.
"It's like going from Jurassic Park to Mars," team leader Shekar Krishnan said of the technical upgrade, which makes the technology center the most advanced within AIG worldwide.
Like a growing number of other Indian computer engineers, Krishnan and his group work for an Indian consulting firm that hires out technicians to American firms like AIG eager for the combination of low prices and increasingly savvy computer skills to be found in India.
The loss of jobs to overseas outsourcing has caused a hue and cry this campaign season, but Krishnan said the AIG Hawaii case shows that the issue is not so cut and dried.
"We learn many new things from our clients around the world and pass that back to other clients like the people here. It's an exchange of knowledge," he says.
Campaniano acknowledged the use of the tax credit leaves AIG open to criticism. Concerns have been raised that firms like AIG Hawaii have abused the act, which is aimed at encouraging the creation of new jobs by offering a one-dollar tax break for every dollar invested in a new high-tech venture.
But Campaniano said the proof is in the pudding.
"We've saved a bunch of jobs and created new ones. If that's wrong, then I don't know what the detractors want out of the act," he said.
Sonny Kim agrees. The Roosevelt High School graduate was working as a software programmer for Sun Microsystems in Silicon Valley when he heard of the new jobs at AIG Hawaii and jumped at the chance.
"I really wanted to come back but there weren't any good challenging IT jobs opening up here for a long time," he said.
Campaniano hopes the technical advancements instituted by Krishnan's group will help turn the operation into a new profit center for AIG Hawaii. He said an estimated $600 million of technical upgrades will be needed by the company worldwide over the next few years.
"If we can compete evenly with the other centers and get even one-sixth of that, we're going to need to hire a lot more people," he said.
