India is starting to assert itself as a center of high-tech innovation, according to a study set to be released this week.
A talent pool of engineers working in research and development that barely existed 15 years ago has blossomed to 250,000 people, more than 140,000 just in Bangalore, said Vamsee Tirukkala, co-founder of the consulting company Zinnov, which conducted the study. That is second only to Silicon Valley. And as Indian ex-patriots return home and new college graduates stay home rather than read to regions such as Silicon Valley, as they have in the past, those numbers are only expected to grow, Tirukkala said.
"The brain drain 10 years ago is actually helping the market today," he said. "These are the people going back today...bringing domain expertise with them. The opportunities in India have dramatically increased for them."
If there is a point to be taken for Silicon Valley in Tirukkala's admittedly enthusiastic report it is one that Valley leaders have discussed for years: The next real competitor for high-tech leadership will not be another American tech hub like Massachusetts' Route 128 corridor or North Carolina's Research Triangle Park. It will be in a developing region such as India's Bangalore.
The growth in R&D investment in India, is perhaps the report's most interesting data point. India's high-tech industry may have gotten its start in call center outsourcing, giant services business, and basic "grunt" software coding, but that is beginning to change. R&D offshoring to India is currently worth an estimated US$9.35 billion, according to the report, and that is expected to more than double to US$21.4 billion within the next four years.
Interestingly, American companies that have been moving more R&D work to India will continue to do so, but for a reason that is perhaps different than the cost-savings that drove them over the last decade: they want to tailor products for the growing local market, and the best way to do that is to have local people who understand cultural and business differences doing the work.
Does that mean Bangalore is going to surpass Silicon Valley for tech industry leadership anytime soon? No. The Valley still receives, by a wide margin, more venture capital investment than any other region in the world, and the big tech companies and universities that call the Bay Area home are not going anywhere.
This article was first published as a blog on CNET News.com.
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