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

8
Findings
The Bay Area and India enjoy a complementary and mutually beneficial relationship that has
grown dramatically since the early 1980s. When personal computing, networking and semiconductor
firms ramped up to meet global demand and commercialize the Internet, a generation of
Indian engineers in Silicon Valley helped launch Sun Microsystems, SanDisk, Juniper Networks,
the Pentium chip, Hotmail, Cirrus Logic and the fabless foundry chip design format—to name a
few among many companies and innovations. Indian immigrants have played a major role in
shaping the technology economy of the Bay Area, at first as students, and later as engineers,
CEOs, entrepreneurs, and investors.
When U.S. businesses began a wide-scale restructuring in the 1990s, cutting costs and improving
quality and productivity in order to compete globally, U.S. universities were not producing the
needed engineers and programmers in sufficient numbers. Indian engineers, entering the U.S. on
H-1B visas and placed on-site with IT clients to do software and systems integration, filled the
gap. The Y2K scare and concurrent tech bubble pushed demand up further.
It is important to understand the nuances behind the data when discussing interactions with
India. Too often the tendency is to have an overly general debate over the pros and cons of
“exporting jobs overseas” through outsourcing back office and call center activities and/or offshoring
value-added technology work to lower-cost global locations. That discussion fails, however,
to distinguish among skill levels, and it often overlooks the changing process of value creation
inside and between transnational organizations.
In Silicon Valley, a relatively small number of highly-educated technologists and entrepreneurs
from India have driven innovation, either at established companies or by striking out on their
own. On the other side of the equation, a large amount of entry-level BPO and mid-level R&D
or product engineering work has been done by workers in the U.S. on H-1B visas or has shifted
to India where large pools of moderately skilled workers were immediately available. While cost
is a factor, both trends have been driven by shortfalls in the supply of comparably trained engineers
at home.
Today, most major Bay Area technology companies have R&D centers in India, as nodes on
global R&D networks that leverage the talent available in different parts of the world to develop
software, networking, Internet, and other applications across a wide range of industry verticals.
Parallel with the development of captive centers, Indian IT firms have emerged as global technology
players serving a wide swath of multinational and other companies. Many U.S. technology
companies have both captive centers and major Indian partners, with work allocated to one or
the other based on core/non-core functions, whether the product is for global or Indian markets,
or IP considerations.
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