Today morning's WSJ's main story was on why some American software companies are shutting down their business in India and bringing back their engineers to United States.
Across Silicon Valley, some technology companies, particularly start-up and midsize ones, are beginning to turn away from India for low-cost labor to do sophisticated tech work. Kana Software Inc. of Menlo Park, Calif., eliminated 100 software-development jobs in India in late 2005 and expanded its U.S. hiring instead. Teneros Inc. shut down a 30-member India office and brought 12 of the people to its headquarters in Mountain View, Calif. Some tech start-ups are choosing other low-wage foreign locales, such as Romania and Poland.
Against a backdrop of rising wages and international competition, it's important for India's economy that its tech giants expand into higher margin business, in order to sustain their growth rates and gain market share. Large Indian outsourcing companies are trying to expand into higher-margin programming and design work, rather than just basic call-center outsourcing and tech maintenance, which now may be done more cheaply in countries such as the Philippines and Vietnam.[Some in Silicon Valley Begin to Sour on India]
The main reason cited for this turn around is that some engineers are getting paid almost 75% of the salary of an American software engineer and the high rate of turnover. Considering that this is the main story of WSJ, it is going to get lot of traction among politicians and business men.