Reverse Bangalored

While most blogs and news articles today talk about the growing outsourcing phenomenon, or getting Bangalored, or the reverse exodus of skilled Indian software workers from Silicon Valley to Bangalore, there's another trend that has started to happen - I call it as "Reverse Bangalored" - the closing down of India center and shifting work back to the US. Over the last 2 months, I got to know of atleast 2 startups that have shut down their India operations, affecting close to 100 people. While the no. of people affected are less and perhaps it will turn out to be a win-win situation for both these people and the talent-seeking-software-companies-in-India, yet the trend is concerning and needs to be addressed.

Munjal, founder of high profile startup Riya, does a good job at outlining his reasons for calling it a "quit". The salaries in India, indeed have gone through the roof. With the Indian Rupee getting stronger against the US dollar and to meet the ubiquitous 30-40% annual salary increases in India, US companies are shelling out more and more $s per Indian employee. Add to it the cost of remote management - the cost of setting up a new center, the cost of travel for employees both ways, the cost of setting up a remote working model etc., which can make the investment much more expensive. However, still the average cost per employee in India is way less than the cost of his US counterpart, but the difference has been shrinking at an alarming pace. It has now reached a stage, where setting up India operations will only make sense, if the productivity expected out of the remote center will be at par with US center. There has to be another reason than the plain vanilla cost-saving factor to establish an Indian center. The reason has to become "talent" and not the "low-cost" factor. The likes of Google and Microsoft have established Research Labs in Bangalore, where the hiring standards are at par with their corresponding US Labs - Such setups are bound to see no reversal, but most other centers do a tradeoff between quality and cost and days are not far off when we will see a major player exiting out of Indian market to choose another low cost region. That will then put a lot of good people on the market, reversing the supply-demand equation in the favor of employers- Until then, the salaries will increase and we might see more small operations making a move out of India.