Report: India isn't just for outsourcing anymore

India is starting to assert itself as a center of high-tech innovation, according to a study set to be released Monday morning.

A talent pool of engineers working in research and development that barely existed 15 years ago has blossomed to 250,000 people, more than 140,000 just in Bangalore, said Vamsee Tirukkala, co-founder of the consulting company Zinnov, which conducted the study. That's second only to Silicon Valley. And as Indian ex-patriots return home and new college graduates stay home rather than read to regions such as Silicon Valley, as they have in the past, those numbers are only expected to grow, Tirukkala said.

"The brain drain 10 years ago is actually helping the market today," he said. "These are the people going back today...bringing domain expertise with them. The opportunities in India have dramatically increased for them."

If there's a point to be taken for Silicon Valley in Tirukkala's admittedly enthusiastic report it's one that Valley leaders have discussed for years: The next real competitor for high-tech leadership won't be another American tech hub like Massachusetts' Route 128 corridor or North Carolina's Research Triangle Park. It will be in a developing region such as India's Bangalore.

The growth in R&D investment in India, is perhaps the report's most interesting data point. India's high-tech industry may have gotten its start in call center outsourcing, giant services business, and basic "grunt" software coding, but that's beginning to change. R&D offshoring to India is currently worth an estimated $9.35 billion, according to the report, and that's expected to more than double to $21.4 billion within the next four years.

Interestingly, American companies that have been moving more R&D work to India will continue to do so, but for a reason that is perhaps different than the cost-savings that drove them over the last decade: they want to tailor products for the growing local market, and the best way to do that is to have local people who understand cultural and business differences doing the work.

Does that mean Bangalore is going to surpass Silicon Valley for tech industry leadership anytime soon? No. The Valley still receives, by a wide margin, more venture capital investment than any other region in the world, and the big tech companies and universities that call the Bay Area home aren't going anywhere.

[michaelo1966]

Great: An acknowledgment that the H1B -- the "outsourcing visa" quoting the Indian trade minister -- is helping India compete with the US by training people here then returning them there. This is a great reason to add more of these visas: let's bring the people here to lower wages, provide a disincentive in the form of dramatically lower wages for locals to go into STEM programs, help India decimate high-tech like China has manufacturing, and lower the wages of millions to increase executive pay. After all, the only reason the US exists is to push up the pay of business executives.

[laxmin]

Michaelo, you seem to be reeling under an utterly ignoramatic impression that the H1B is all about Indians learning from the Americans and lowering the wages.

Well, for your bigoted mind, the fact that Indians have also contributed their bit for the American Technological Advance have been conveniently forgotten.

Today, about 15% of Industry Gurus are Indians who have started hundreds of companies and generated thousands of jobs. Think of Sun, Microsoft, Adobe, SAP, Oracle etc etc, do a review of who works there and you will find Indians at the top right up there with Americans, working hard, studying hard and basically earning their way up there.

Way to go Indians.

[arunshekar22]

Laxmin, it is not that Americans in general are any less capable or so...it is just that they already had a comfortable decent life since long before you even started formal education and so, people got used to the easy life that they get from their Govt. like social security, medical facilities, plenty of jobs at stores, restaurants etc. Since India is full(mostly) of middle class and poor folks, here kids are brought up with a mentality that teaches them to compete and compete and compete and nothing about decency or doing the right thing. So eventually many end up mugging in all that is out there in books and rise up. Why does an Indian who otherwise won't even move a stone here for weeks would work day and night in States?? Cuz they get paid well, hence better purchasing power and decent living for him/her and family...which is the core agenda that drives most Indians to perform well abroad.

[shikarishambu]

Well said. "What can brown do for you...?"

Michaelo, does make a valid point - the last line. I would rather see a windfall tax on CEO/ exec pay than windfall profit tax that O'Bummer is proposing.

[scottkraai]

H1 B visa, a bane for the employee, the reason is this, folks work in high tech areas, but cannot get a green card, it takes atleast a decade here to a green card. I myself got educated here and have a Masters (by the way my masters was free, with a stipend, which is like 60k) worked here in the top companies, trying to apply for a green card, but the process is very laborious, and it drives the living hell out of you.
Now tell me, would i like to live here without any freedom of movement (I mean no green card) or rather go back to India and start up a venutre with all the knowledge i gained in the past decade ?? No brainers......
The US must think about its priorities if it wants to stay top on the Hi tech market.......people make up the talent pool...and its top priority to retain the talent pool...
cheers...

[arunshekar22]

Indians in India are generally very very cheap, so will be their R&D and hence their products. These big companies cannot think beyond their profit on balance sheet even if that means cutting thousands of jobs in their home country rendering these people helpless and on street, who are used to easy and good living without mindlessly suffocatingly competing like hound dogs as it is in India. In future, no one would be as proudy and arrogant as Indians would and still never be thankful to globalisation and american jobs which is feeding them. It is well said that, One Man's lose is another Man's gain...and in this case, Americans are losing cuz of American entrepreneur's greed to make profit. Remember, most of the companies that come to India or China come here to reduce cost hence more profit, not invest on future technologies to improve life( which mostly isn't what companies aim for).

[NoDomainsForSale-com]

The rapid expansion of India?s higher education system for producing computer scientists and IT-enabled-services (ITeS) graduates has resulted in huge class sizes and problems with low graduate quality.

Having managed IT and ITeS outsourcing projects to Indian vendors from U.S. clients since 1987, I see continuing frustration with the slow rate of institution building in sectors of the economy and society that would be expected to support a culture of high tech innovation. This frustration is often felt most keenly by those of us who are people of Indian origin (PIOs).

Banking rules, to my knowledge, have still not been reformed to allow most IT companies to have more than one bank account. Currency transfers are still a hassle. The bureaucracy discourages innovation. Too many 'babus' have their hands out.

For a wider perspective, the innovation climate in Pakistan is worth looking at, especially in the three major metropolitan areas where top-tier IT talent is still readily available at reasonable rates and with low turnover, and where intellectual property protections are given more than lip service.

A news site for high tech startups in Pakistan is Green and White, which provides a blend of entrepreneurial fever and high tech innovation:

http://greenwhite.org/

Get out of the box and take a look at GreenWhite.org

[tinasilvee]

Through Outsourcing one can get best possible solution at lowest cost thereby making a sizeable profit.

http://www.outsourcewebsite.com