The Great India Gold Rush of 2006

Posted by Jim Stroud

March 3, 2006

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During the height of the dot-com boom, Dan Scheinman was one of Silicon Valley’s most popular tech execs. As the chief of mergers and acquisitions for Cisco Systems, he couldn’t go to a party without being besieged by entrepreneurs eager to sell their business to the deep-pocketed tech giant. Now Scheinman is once again the toast of dinner parties, but he’s being pitched on new properties over tandoori chicken and Darjeeling tea in Bangalore. For Cisco, India is the new frontier, where it’s investing $1.2 billion to build a gleaming R&D campus that will employ 3,000 people. “Bangalore feels like the center of the technology world,” says Scheinman. “There’s a level of chaos, energy and a sense that anything is possible.”

Not long ago, what seemed most possible was that India would steal the jobs of American workers. But as George W. Bush visits there this week, he’ll find a maturing economy that is no longer all about call centers and basic tech support. Now big American investment banks and drugmakers are joining tech firms on the passage to India. R&D centers are springing up so fast that there’s now a shortage of Indian engineers. And the stigma of outsourcing jobs to India is disappearing. American companies once afraid to put their names on the doors of their Indian offices now issue press releases touting their latest investments there. “American firms have gotten over their anxiety about India,” says financial-services consultant Harrell Smith of Celent Communications. “Now the new anxiety is if you’re not in India.” What happened to the outsourcing backlash? It has been muted by the fact that India didn’t suck Silicon Valley dry after all. Actually, U.S. tech employment is growing.

Read: Outsourcing: Silicon Valley East