Tech Outsourcing in India

AlwaysOn Network has an interview with Sumir Chadha of WestBridge Captial Partners. Some excerpts:

Now, India is rapidly moving up the value chain from outsourced services into product firms. Firms like July Systems, one of our portfolio companies, are developing wireless platforms and products in Bangalore. Another of our companies, Emagia, has developed its cash flow management product almost entirely in Hyderabad. Even multinational companies like Oracle have started doing high-end work in India, which is new.

We see explosive growth in telecom. Three years ago, India had the highest cost per minute in the world for wireless telecom. Now, its the cheapest30 percent cheaper than even China. And a year ago, there were 8 million wireless subscribers in India. Today there are 22 million, and were seeing growth of 2 million subscribers per month. This is a revolution in the making.

The United States now graduates about 25,000 software engineers per year. India has over 100,000 annually. Now, this is just bachelor’s degrees, not including vocational degrees with which Indias numbers are significantly higher.

In terms of quality, engineers on average are better in the United States, but when you look at it from a price-to-performance basis, theres really no comparison. An entry-level engineer in India makes about $3,000 per year. An entry-level engineer with equal qualifications in the United States is about $45,000.

While on average the quality is higher in the United States, the top 1020 percent of engineers in both countries are probably equal, and in India you get a better deal. There are obvious different levels of qualityas with any market in geographical pockets within both countries.

Three years ago, the [Silicon] Valley did low-end test and QA in India. Now, India is seen as the future. VCs and tech firms are integrating India into their portfolio and corporate strategies.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.