India's Silicon Valley

BANGALORE — India's lush garden district is as unlikely a place for an internationally acclaimed center of high technology as you're likely to find. A closer inspection, however, provides a better understanding of why some of the world's major corporations are locating development and test centers in this pleasant southern Indian city. They include America Online Inc., Cisco Systems Inc., Delphi Automotive Systems Inc., Deutsche Bank, IBM Corp., Eastman Kodak Co., Motorola Inc., Nortel Networks Ltd. and Tektronix Inc.

Despite its almost-temperate climate and rating by Forbes magazine as the most-livable city in the country, that alone can't explain how Bangalore has transformed into a wellspring of electronic engineering and computer software talent. Rather, it's the Indian government's fortuitous decision to locate an aerospace and high-level research & development center here in years past that laid the foundation for today's technological prominence. There are 35,000 software professionals in the area and about 15 colleges graduating about 1,500 electrical and electronic engineers yearly.

Add to that the Tata family's — India's Rockefellers — choice of Bangalore as the site for the Indian Institute of Science, and by the 1960s there was a critical mass of trained and experienced people here. More recently, reacting to a shortage of desirable electronic engineering graduates in North America, U.S. companies have begun tapping the talent pool in India generally, and Bangalore in particular.

“The Internet allows us to shrink geographical differences,” says Merrill Lynch analyst Henry Blodget. “It doesn't matter whether your programmers are in California or halfway around the world in India.” Indeed. India's National Assn. of Software and Service Companies estimates the country's software exports will soar from $6.2 billion last year to $50 billion by 2008. Some 60% to 70% of the exports are earmarked for the U.S. and are considered least likely to be impacted by the economic slowdown there. Some experts speculate that outsourcing to lower-cost India may even increase.

Among Bangalore's recent arrivals, Delphi opened a global technical center here in March 2000, its third in Asia among 31 dotted around the world, to cash in on such local specialties as application software testing and test methodology. The leading U.S. automotive supplier is investing $25 million over a three-year period in its new facility, located in the city's International Tech Park. The center's focus is on embedded software development for automotive controllers, such as those used for engines, powertrains, brakes and suspension systems, collision-control systems, instrument clusters and mobile multimedia systems.

“While software development is our initial thrust, Delphi Technical Center India will be a key component of Delphi's math-based engineering strategy,” says Director Ashok B. Ramaswamy. Expanded services eventually will include capability in computer-aided design/engineering (CAD/CAE), electrical computer-aided design, mechanical computer-aided design and research & development.

Delphi's ramp-up began to accelerate with the start of Phase Two last September. A local advertisement for workers drew 2,400 resumes. A second ad in January attracted 2,200 more. Each month, 10 to 15 graduate electronic engineers, knowledgeable about embedded software, are being hired. The staff, now around 130, will reach 400 by 2003.

The new recruits join program teams of eight to 10 people and use a variety of equipment to test for “bugs” in the software embedded in automotive-related controllers. For example, automatic simulators can run thousands of tests on a controller under simulated operating conditions. When glitches are detected, specialists rewrite the appropriate lines of computer code and eliminate the problem.

“We are connected worldwide (to other Delphi centers),” says Mr. Ramaswamy. “Work is partitioned on the ability of a tech center to support a test program, which typically has a lifespan of one to two years. Mr. Ramaswamy says he has no concerns about attracting the talent Delphi requires, noting that “we pay the best salaries in this part of the world.” A typical salary in Bangalore for a starting electronics engineer is $434 a month, with rapid double-digit raises the norm. As a result, information technology (IT) professionals routinely earn more than doctors.

This, then, is how one of India's younger cities, only a mud fort in the 16th century, has become a thriving and modern metropolis of around 5 million people. A natural chain reaction has been created as increasing numbers of bright young men and women eagerly seek out the education needed to follow brothers, sisters and neighbors into well-paid IT careers.

In doing so, they are transforming a former tropical paradise into a powerful magnet for foreign companies by offering a deep pool of world-class talent willing and able to do what needs to be done for around one-quarter U.S. salary levels.