October 28, 2007

Will Jobs Move Back to Silicon Valley from India?

India Knowledge@Wharton How can people even think this is possible for a sizable team is beyond me. It's not about India, In my mind it's about global delivery. There are many ways to skin the cat. First the most obvious - Indian companies will adapt to the new reality of a stronger currency, and an eroding obvious savings. Right now indian companies are making insane margins, and the years to come will see those margins shrink to North American services like margins. The big players are focussed, but every smaller player I talk to, they are all running after three things at once, the direct side effect of this lack of focus, they need to have fat margins in services to cover for all those product tentatives they have. They will do less and less of exploration, and more and more of services, which will allow them to optimize their operations - and keep to be competitive. Second let's say a company is sick an tired of India right now, right fully so, if this CO can't have north of 100 people in its own Captive Center, it will at one point throw in the towel, I believe their next step will be to look elsewhere to another country. We have numerous conversations of people frustrated with their inability to make things work in India, and they want to know where else to go to be easier for them, they're not about to stop outsourcing. Third companies are outsourcing and sticking to it, doing global development has to be leveraged. The name of the game is distributed development, it's to go where the talent is. So maybe it's not India, and maybe it's somewhere in a lower cost location as close as a neighboring state combined with a lab in Eastern Europe that floats your boat - but by all means central development is a thing of the past.

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