Sramana Mitra has a post by Savita Kini:
Most of the work done today in [Banaglore’s] offshore offices, as well as the IT service companies is still the kind or cost reduction work that cannot happen in silicon valley. While definitely there has been some improvement in the kind of work that is happening here, its not comparable to the kind of cutting edge research and innovation that happens in Silicon Valley. The new startups are also mostly taking the beaten path as far as technology is concerned. Adding to the already skewed environment, the VCs have been flocking to the city hoping to capture the best deals. To manage their own risk, they continue to invest in late stage deals or in the services model. Some of the deals which happened in the last 1 year have majority been in the dot.com internet companies which my new friend Sramana Mitra calls Concept Arbitrage. I am not passing any judgment here. In a way its good because at least the entrepreneurial culture will get reinforced and more risk takers will emerge.
However, to be really compared to Silicon Valley, we need something much broader than the current mixture of IT services & products model.