New Start-Up Breed: Born in the USA, Made in India

Multinationals have trimmed the fat for years by shifting low-value work to India. Now, slim Silicon Valley start-ups are leading a new outsourcing wave, moving cutting-edge product development to Bangalore and beyond.

The start-ups have their top managers and sales teams in the United States, but design products in India, where high-tech engineers earn a third of their U.S. counterparts.

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News source: Reuters While the 1,800 firms in India’s technology capital have focused on lower-value services such as call centers and software coding, companies are now tapping low-cost expertise in a corporate global village where location is not important.

“Companies don’t have passports,” Indian venture capitalist Abhay Havaldar declares bluntly.

The new hybrid firms have, inevitably, spawned new consultant jargon, such as ‘right-shoring’, ‘any-shoring’ and ‘smart-sourcing’ — all signs that they now care more about what they do than where they do it.

B.V. Naidu, Bangalore’s director of the Software Technology Parks of India, says 50 start-ups have registered in the past year, employing at least 500 people, and with plans to grow.

The numbers are small for an Indian outsourcing industry that already exports $12.5 billion worth of software and back-office services, and employs 800,000 low-cost, English-speaking workers.

But the start-up numbers are for Bangalore alone, and other cities like Hyderabad, Madras and Pune are not far behind.

Naidu spotted the trend as early as 2000, but it was stymied by the bursting of the boom.

“Some of them are still around,” Naidu said. “The first wave was in 2000. The second wave is now.”


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