PDF: 2962 pages, 5.2 MB - Bay Area Council Economic Institute

Software/IT Services/Business Process Outsourcing
Bay Area Connections
Not surprisingly, it is in the IT Services/BPO/software space that cross-border relationships are
most prevalent. Bay Area tech firms understood early the value of India’s considerable and underutilized
talent pool of engineers, programmers, and computer scientists. As computing became
more complex with the emergence of the graphical user interface (Windows and Mac
versus MS-DOS), faster and higher-storage chips, new Unix-based business applications, and
Internet commercialization, companies needing to throw skilled employees at increasingly
sophisticated problems found themselves with a shortage of workers at all levels.
Moore’s Law (the name given to Intel founder Gordon Moore’s 1958 assertion that the number
of transistors on an integrated circuit—and thus computing power—will double approximately
every two years) began to bump up against the California (and eventually the U.S.) labor market.
The 1999 Y2K crisis multiplied the demand for talent. Much of the work was not particularly
high-end, but required large numbers of reasonably skilled people. The already robust population
of Indian tech workers and students in Silicon Valley was joined by a flood of new workers
arriving on H-1B visas. These workers were embedded deep in the core business processes of
the largest Bay Area and U.S. corporations, learning the structures of their legacy IT systems and
gaining an understanding of how IT could unlock efficiencies and productivity.
Offshoring and cost arbitrage entered the picture in 2002, after the tech industry collapse dried up
new investment and forced companies to scale back their operations and focus on cost control.
At the same, time 9/11 had led to stringent visa restrictions. Tech went increasingly to China for
its manufacturing and to India for its IT services and software, leveraging relationships with local
Indian employees, entrepreneurs and professional networks.
Over time, successful companies have discovered the true value proposition that sees India as a
platform for (a) developing IT services and software that can foster innovation across industry
sectors, and (b) developing new products and services that deliver basic and mid-level technology
solutions for governments, businesses, and billions of new consumers in emerging markets.
Oracle Corp. entered the India market in 1987, selling its software and services through a
distributor until 1993, when it established a wholly-owned subsidiary. In 1994, it opened
its India Development Center in Bangalore, which successfully delivered the first version
of Oracle’s Internet computing technology in 1996. A second India Development Center branch
opened in 1998 in Hyderabad, to focus on enterprise business software.
Oracle also joined with Hewlett-Packard in 2003 to launch an E-Governance Centre of Excellence
in Gurgaon, supporting Linux-based open source e-governance initiatives by central, state, and
local government agencies. Among the projects are:
• eSeva, a web portal delivering government-to-consumer (G2C) services in Andhra Pradesh;
• online ticketing reservations for the Indian Railway Catering and Tourism Corp.;
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