Posted on 09/09/2002 8:00:46 AM PDT by UnBlinkingEye
Country's `Silicon Valley' booming 2002-09-09 by Cydney Gillis Journal Business Reporter
You or someone you know has either lost a job or an investment in the high-tech sector in the past two years.
It's been hard, but it can't be helped. The high-tech bubble burst in 2000.
But not everywhere.
While American software and technology companies languish, laying off thousands of workers each week, India's tech sector has been growing by leaps and bounds.
In the fiscal year ended March 31, India's software exports grew from $6.2 billion to $7.7 billion -- a mere 23 percent increase in a 10-year average of 42 percent annual growth.
That makes India the world's No. 2 exporter of software behind the United States and the top choice for U.S. companies, including familiar names such as Cisco, Dell, Hewlett-Parkard, IBM, Intel and Microsoft, to outsource the creation or coding of software products -- at about one-fourth the wages.
According to statistics published in April by Forbes magazine, an Indian software programmer with three years' experience makes $17,000 compared to $67,000 in the U.S.
It's all part of the globalization of the high-tech industry -- and its jobs. But Yash Gupta, dean of the University of Washington School of Business, which Gupta has focused squarely on technology, says that doesn't mean jobs will be lost in the long term.
``I worry when people say American jobs are going somewhere else,'' said Gupta, a native of India.
``We live in a global economy,'' he added. ``Over a period of time, it will achieve equilibrium in that some jobs will come here and some jobs will go there.''
India's `Silicon Valley'
In India today, ``there'' means two high-tech centers located in the country's south-central region -- the cities of Bangalore and Hyderabad.
Called the ``Silicon Valley of India,'' Bangalore, in particular, is home to more than 1,000 high-tech companies.
Gupta noted many of them were started by Indians who returned home after working at U.S. companies such as Microsoft.
In the wake of the dot-com bust and layoffs, a lot of people ``have gone back (to India) and found themselves experienced in how to develop organizations,'' Gupta said.
``Some of the major companies are outsourcing to them,'' he added, because ``having worked three, four, five years (in the U.S.), they understand the business culture and they have the technical know-how -- otherwise they wouldn't have been here in the first place.''
``It's like software cafes all over,'' Gupta said of small Indian firms doing piece work for a variety of companies.
In addition, many U.S. firms have opened up shop in India and are now expanding. Among recent developments cited by the Asia Intelligence Wire news service:
* ADC Telecom plans to spend $25 million on a new Indian subsidiary.
* Cisco Systems has committed $200 million to expand its technology center in Bangalore.
* Dell Computer will use its Bangalore site to develop more of the software used in its PCs and is also looking to move office functions there.
* Hewlett-Packard is rolling out new customer services from Bangalore at a cost of more than $2 million.
* Microsoft is spending $50 million on an India Development Center in Hyderabad and recently opened a technology lab in Bangalore.
High tech, low cost
It's a success story the Indian government worked hard to create.
In 1991, India threw open its doors to foreign investment and now offers a bonanza of benefits and tax incentives to software companies such as Microsoft, which employs 350 people at an Indian subsidiary it founded in 1990.
``Microsoft was one of the first multinational corporations to open shop on Indian soil,'' Microsoft India's managing director, Rajiv Kaul, wrote in an e-mail.
Those investments and the partnerships built around them, he said, have ``helped create an entire industry around our business.''
Kaul credits the growth to India's highly educated information technology workforce, which has nearly doubled to 430,000 professionals from 220,000 just two years ago.
Outside the U.S., it's the largest pool of technically qualified, English-speaking workers -- the outcome of India's world-class training.
The six campuses of the Indian Institute of Technology are second to none, Gupta said. The education they provide is emphasized by parents, aunts and uncles, he said, as a way out of poverty.
INDIA'S LURE
India's technology sector got a boost in 1991, when the nation adopted economic reforms to attract foreign investment.
Since then, encouraging technology growth has been ``an action point (that) has consistently enjoyed the government's support,'' says Rajiv Kaul, managing director for Microsoft India.
Among key programs and tax incentives Kaul cites:
* Software Technology Parks: India's Department of Electronics has set up autonomous organizations, the largest of which is in Bangalore. They provide benefits to foreign software companies including a reduction in what the firm is required to export (normally 100 percent of what it produces in India) and exemption from a Minimum Alternate Tax.
* Export Processing Zones: Inside a government-created export zone, a company can be 100 percent foreign owned. Firms are expected to export 75 percent of what they produce and can sell the balance in the domestic market. Other incentives include cash subsidies, a tax break for five years, and exemption from income tax on export profits.
* Piracy protection: Authorized sellers of imported software are allowed to reproduce software in India and sell it without import duty. Local software manufacturers are exempted from excise taxes.
* Depreciation on products: Firms can take 60 percent annually to compensate for quick obsolescence of software.
* Customs duty exemption: All software used within the high-tech sector is 100 percent exempt from customs duty.
Cydney Gillis can be reached at 425-453-4226 or cydney.gillis@eastsidejournal.com.
Savings of 75% is anticiapted.
Globalism is no friend of American workers. The drive to lower wages to compete with third world countries is a disgrace.
Oh please, indeed.
Multinational corporatism, Indian workers and consumers are the beneficiaries of policies that backstab American hitech employment. The fact established in the United States becoming the world's largest economy in the past 200 years is that tariffs work.
The lower taxes and de-regulation are for multinational corporations, not American workers. We could lower taxes on American workers by substituting tariffs for the income tax, a system that worked until the despicable Woodrow Wilson instituted the income tax.
Well said!
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I might add what I've been getting is programs the glibbishes and the American company selling them has no idea what is happening.
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Is there a slot in you head that accept the tape you automatically recite?
Is this another term for 'bugs'? A.k.a. coding opportunities.
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Bugs, then. Kluge and glibbishes are electrical engineering terms.
You buy a program that has bugs. When you caal up the company that sells you the program, they can't help you because they have little idea what's in it. The report needs to go back to India or Pakistan for correction by God knows who. A year later the program is revised with improved bugs.
I had an Indian clown send me a demo engineering progream. Not only was it obsolete and marginally functional, the thing had a Russian virus in it that attacked my machine.
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