2/10/2004 » Econ

When most people think of India, they still think primarily of poverty. But the Indian software and high-end medical industries are now making an 'island of quality' pitch. Just as specific teams within underperforming companies can still kick ass, so too can sectors inside a developing economy, e.g. Russian programmers, Dominican baseball players, Cuban cigars.

Medical tourists are having major procedures done in India and Thailand to save 30-80% on procedures ranging from heart surgery to root canals and enjoy a vacation at the same time. The savviest are using private hospitals at a level similar to those of U.S. and European medical facilities; one cardiologist practiced in Manhattan for 20 years before opening a high-end private facility in Delhi.

This is very similar to what's happened with call center and software development. These industries depend in part on international credentials: an ISO 9000-rated tech company can brag about it. But the U.S. medical system is specifically designed for restraint of trade to keep prices high. Big Med has not set up an international credential system, which is the only way, for example, that you're at ease spending $10K on a procedure after far less research than you do for a $300 camera.

In India, the island pitch is made even more real by creating worlds apart: Mumbai's export zones, Bangalore's software campuses. Visiting software companies in Mumbai and Delhi, I've seen a full spectrum of companies, from startups on a shoestring (slow PCs, flickering lights) to those with gleaming, Microsoft-like offices, the only visible difference being a higher density of workers and fewer private offices.

Because of India's legendary population density, people are more comfortable with being elbows-to-gills with coworkers. A long history of segregation by caste means that gated communities are not considered anti-democratic or anti-national the way they are in the U.S. But in the long run, these islands are potentially combustible.