Packing My Bags in Bangalore -- and Movin' to the US of A

China Sourcing Alert    
Saturday, June 5, 2004

Dateline: Qingdao, China

 

Packing My Bags in Bangalore -- and Movin' to the US of A

 

I came across an interesting article about a company which moved from India to Silicon Valley (yes, you are reading this correctly).  Perhaps it's an aberration, but there may be signs in the tea leaves.  (See http://tinyurl.com/3f4vm .)

 

More specifically, the company moved from Bangalore to Milpitas.  Better yet (for my unemployed friends in the Valley), they have about 20 open positions.  Okay, the reason for moving was to get access to "the right kind of people."  And receiving an investment of $7.5 million from Norwest Venture Partners didn't hurt, either. 

 

Some interesting takeaways:

 

* The company, Epiance, is looking to hire a CTO and CMO (Chief Marketing Officer).  I'm surprised they could raise $$$ without a CTO and CMO.  (However, this fact isn't particularly relevant for China's SIs.)

 

* The article stated that being based in Silicon Valley provides better access to markets in Japan and China than does a headquarters operation based in India.  Reading between the lines, access to markets in Japan and China may be much more highly regarded (at least by American VCs) than access to local markets in India -- and firms in China have better access to their own market (obviously) and to the markets in Japan and South Korea.

 

* A related article noted that it was easier to find space in Silicon Valley than it is in Bangalore.

 

Also, an article recently published in an Indian business newspaper ( http://tinyurl.com/3fo7q ) proclaimed that there is a huge demand for IT professionals in India.  Fact is, it might be easier to hire in Silicon Valley than in Bangalore.  Also, wages in India are going up and there seems to be a bit of job hopping -- kind of like the way things were in the Valley in the late 90's.

 

Bottom line:  The move by Epiance is an anomaly.  But it says something about the labor and property markets in India, and the lack of access Indian firms may have to markets in Japan and China (do with the latter what you will).  The labor situation speaks favorably for China's SIs; the SIs in China have a much lower cost and more stable labor pool.  Frankly, I think the wage differentials are much higher than normally quoted -- and this is a HUGE competitive advantage for China's SIs.

 

Cheers,

 

David Scott Lewis

President & Principal Analyst

IT E-Strategies, Inc.

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