India no longer attractive to Big IT Corps?

In a recent Press Conference in Bangalore, India Intel CTO Justin Rattner said, “India used to be seen as the perfect offshore research and development hub for global firms seeking to tap its low-cost and supposedly vast engineering talent pool to devise products for world markets.”

We all know that Indian IT sector is notoriously becoming costlier and the cost advantage is fading, engineers trained in basic research are harder to find, reducing India’s appeal in the Outsourcing world. Companies such as Microsoft, IBM, Intel, AMD, Google, Motorola, Yahoo!, Cisco and Siemens have opened RnD centers in India, drawn by payroll costs that were once a quarter of those in the US and Europe but it is losing its sheen as an offshore RnD hub.

“If this trend continues, the cost advantage of doing RnD in India compared to the US will go away,” Zinnov chief executive Pari Natarajan said in an interview, predicting a shakeout in the RnD offshoring market. He added that, some companies witnessed a 20 percent rise last year in the cost of running their RnD operations in India. There are about 600 RnD facilities setup by overseas firms that invested roughly a combined $6 billion.

Natarajan added, “India turns out more than half a million engineers every year, but institutions do not train them in basic research, limiting the available talent pool to no more than 100,000 people. It’s going to be very difficult for companies which have very aggressive hiring targets. It’s almost impossible to hire unless you compromise on the quality of talent.”

With regards to the availability of Highly-specialized-skilled Technical Engineers, India has been lacking very seriously in that front. We can recollect that a large swathe of Silicon Valley Startups and Midsize companies that do sophisticated tech work are turning away from India as their premier outsourcing destination. While such companies make up just a fraction of India’s outsourcing work, they had been an early catalyst for the growth of India’s Information Technolgy Business and helped the country attract other outsourcing clients.

Companies like Infosys, Wipro and TCS have braced up to do more of the sophisticated RnD works. However, analysts says that most of these companies derived more than 50% to 60% of their revenues from the basic services such as software coding and tech maintenance and support. In a not-so-surprising event, Riya had to interview more than 70 candidates just to hire 6 highly skilled developers for their Bangalore (India) office sometime back. It may be noted that they have shut down their Bangalore RnD Office long back.

Many Indian-American entrepreneur who tried to do startups in India seem to have bad-taste experiences and have decided to stay back in the States than try to understand the plethora of hiccups that plagued them while setting up a remote office in India.

The unpalatable truth that most of us Indian IT Developers live with it that despite the rapid development of India specially in the IT field, research and study have revealed that the Indian Techies lacks way behind than their US counterparts. An American Techie is about 10 times more productive than an Indian Techie. Of course, our argument is that the Americans were way ahead of India in the IT field; India started off IT in a big way recently. There are lot of catching-up to do.

Well, the Indian IT Outsourcing Honeymoon is indeed showing signs of turning sour month by month.