India's IT Star Is Rising

Ann All

Where will the next Silicon Valley be located? North Carolina's Research Triangle? Massachusetts' Route 128 corridor?

 

It may be Bangalore or another area of India. India is growing an impressive pool of engineers involved with R&D, says a new report by consulting company Zinnov. It puts the number at 250,000, second only to Silicon Valley, according to a CNET item about the research. And the number will grow as Indian expats come home and college graduates choose to stay and work in India instead of seeking fortunes elsewhere.

 

An increasingly entrepreneurial culture in India also is attracting Silicon Valley venture capital firms like Sequoia Capital and leading ambitious employees to leave their jobs at outsourcing companies and found their own start-ups, as I wrote in December.

 

Says Vamsee Tirukkala, Zinnov's co-founder:

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

The Zinnov report predicts the amount of R&D work offshored to India will more than double within the next four years, from its current estimated $9.35 billion to$21.4 billion. Much of the increase will be driven by Western companies interested in capitalizing on India's burgeoning consumer market.


 

Another sign of India's growing tech influence is its booming domestic IT market. The Economic Times reports that domestic IT demand grew 34 percent in 2007-08, compared to a 27 percent increase in export business. Dataquest, the research company that produced this statistic, calls it a "day of reckoning."

 

While the domestic market is still worth only about half as much in dollar terms as the export market (an estimated $24.75 billion vs. $47.45 billion, according to Dataquest), it is growing as the export market slows.

 

Dataquest says it expects locals to follow the growth curve previously taken by foreign customers, moving away from simple staff augmentation and project-based deals to more comprehensive outsourcing relationships.



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