India gets over 50% jobs outsourced by Silicon Valley

Almost half of the jobs that Silicon Valley outsources comes to India, as more than 53 per cent of the firms in Silicon Valley outsource a p...

Almost half of the jobs that Silicon Valley outsources comes to India, as more than 53 per cent of the firms in Silicon Valley outsource a part or all of their operations. According to a survey conducted by Santa Clara University, most of these jobs comes to India and other Asian countries, whereas China still lags in this area.

While IT services, healthcare and communications sector are witnessing healthy outsourcing, there is a decline in outsourcing in the manufacturing sector.

The percentage of firms reporting ‘‘no outsourcing done in the last quarter’’ has increased in the manufacturing sector, from 51.1 per cent in 2003 to 60.7 per cent in 2005. Much of this drop was in the semiconductor and electronics area, the survey said. But China still rules the roost when it comes to outsourcing from the US manufacturing sector. According to Accenture, over 23 per cent of US firms and 19 per cent of European companies regard China as their primary sourcing market for manufacturing. Only 14 per cent of US firms prefer India for low-cost sourcing. However, India stands nowhere for low-cost sourcing for European manufacturing companies due to its high cost and low quality compared with sourcing from China.

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Globally, companies intend to double their low-cost country sourcing in the next three years and expect the savings to increase by 37 per cent.

But in terms of IT services outsourcing, India is way ahead of China. Said Mario Belotti, Professor of Economics at Santa Clara University: ‘‘India has an educated work force, which can speak reasonably good English. Hence, it makes it an attractive place for outsourcing of IT services.’’

Other Asian nations were reported to be trailing in the jobs race behind India, with China accounting for only 8 per cent of the outsourced IT jobs.

The survey has tracked outsourcing by regional companies over the last three years, and registered a slight decline in the number of firms taking jobs out of Silicon Valley last month. In August, 2005, the Silicon Valley posted a 7 per cent year-over-year increase in computer and electronics manufacturing jobs, an indication of less outsourcing from the sector.