India’s Silicon Valley lures foreign companies

As Silicon Valley wrestles with a crippling energy crisis and massive layoffs, something very different is happening halfway around the world in Bangalore, Silicon Valley’s equivalent in India, where each week a new, completely foreign-backed IT company sets up shop.

While an economic downturn grips tech companies worldwide, leaving them to scale back operations and pinch pennies, the Bangalore government is taking out full-page ads in publications such as London-based business magazine The Economist, offering to show investors “how to actually benefit from the slowdown by outsourcing from Bangalore.”

By now, most big companies know what India’s technology corridor has that other places don’t – a plethora of highly trained, English-speaking workers, and dirt cheap costs. Although there are a handful of emerging nations that can offer cheap labor, none can offer the current 150 million college graduates in India, 80,000 of which are Bangalore-based IT-trained professionals. This, mixed with the prevalence of English in the country and affordable real estate, is what has made the southern state of Karnataka, where Bangalore is located, the “Silicon State.”

Vivek Kulkarni, IT Secretary for the government of Karnataka, was not shy about promoting the region’s selling points during a visit to Boston this week as part of a first-ever delegation of Bangalore’s IT leaders.

“For US$300 dollars a month, you can get a good programmer, and floor space is just 20 cents a square foot,” Kulkarni said.

Those are numbers that most companies would be unlikely to ignore. That’s why powerhouses like IBM Corp. and Cisco Systems Inc. long ago recognized the advantages of the area. In fact, Bangalore has grown so rapidly, that where there were 13 technology companies in the city in 1992, now there are 928.

“We already have all the big names,” said Kulkarni.

That’s why the delegation has come to the lure startups to the region, not only to gain more investment and employ more local workers, but also in hopes of expanding upon Bangalore’s bread and butter industry – providing services to U.S. companies by manning call centers and offering tech support.

“It’s funny,” said David A. Kaminer of public relations company The Kaminer Group, who helped organize the delegation’s U.S. visit, “Everyone in Bangalore says they want to do applications, while everyone in the United States says they want to do services.”

If the region’s booming growth is any indication, it’s likely that Bangalore will eventually get what it wants: expand beyond providing services into hardware and software development. Apart from the hefty advantages of qualified personnel and low costs, the almost 12-hour time difference between the United States and India allows companies to be 24-hour operations in which India works while the United States sleeps.

That, according to Kulkarni, cuts a product’s life cycle in half. In addition, the Indian eight-hour day only costs 20 cents on the U.S. dollar, Kulkarni noted.

In an ironic sense, the world’s current economic woes are perhaps the best thing that could have happen for Bangalore.

“Everywhere you go in Bangalore, people sit and talk about technology. That is how we share knowledge and keep growing,” Kulkarni said.

As the delegation rolls through New York, Washington and San Jose this month, chances are a lot of people, especially those looking to cut costs and find affordable alternatives, are going to be talking about technology in Bangalore.