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pluto
07-06-2007, 02:46 AM
03 July 2007

Silicon Valley has helped power India's outsourcing boom by shifting
technology jobs to that country.
Three months ago, Munjal Shah reversed a bit of that shift.

Mr. Shah, who leads a California start-up called Riya Inc., had opened an
office in India's technology capital of Bangalore in 2005, hiring about 20
skilled software developers. The lure was the wage level: just a quarter of
what experienced Silicon Valley computer engineers make.

Then Indian salaries soared. Last year, Mr. Shah paid his engineers in India
about half of Silicon Valley levels. By early this year, it was 75%. "Taking
into account the time difference with India," he says, "we weren't saving
any money by being there anymore." In April, Mr. Shah shut down the
Bangalore office and offered half of its engineers a chance to move to San
Mateo, Calif., with work visas.

Across Silicon Valley, some technology companies, particularly start-up and
midsize ones, are beginning to turn away from India for low-cost labor to do
sophisticated tech work. Kana Software Inc. of Menlo Park, Calif.,
eliminated 100 software-development jobs in India in late 2005 and expanded
its U.S. hiring instead. Teneros Inc. shut down a 30-member India office and
brought 12 of the people to its headquarters in Mountain View, Calif. Some
tech start-ups are choosing other low-wage foreign locales, such as Romania
and Poland.

Overall, India's tech and outsourced-services industries continue to boom.
The industries' revenues rose by almost a third to $39.6 billion in the
fiscal year ended in March, says the country's National Association of
Software and Service Companies, or Nasscom. U.S. tech companies continue to
shift basic work like software coding to India, where big outsourcing
companies such as Infosys Technologies Ltd. and Wipro Ltd., hire tens of
thousands of new Indian employees each year. Silicon Valley giants Cisco
Systems Inc., Google Inc. and Adobe Systems Inc. are expanding their staffs
in India.

They often have other reasons besides pay to be there, such as to be closer
to customers. But even some of the large tech companies are reconsidering
India. Apple Inc. shelved plans to build a technical-support center in India
last year; a spokesman declined to say why. Intel Corp. is stepping up
hiring in Vietnam -- which has cheaper labor than India -- and says it isn't
significantly adding to its Bangalore staff of about 2,400. "The wage
inflation rate for engineers in India is four times what it is here" in
America, says Intel's chief executive, Paul Otellini.


http://www.moneyweb.co.za/mw/view/mw/en/page94?oid=144480&sn=Detail