By Andy McCue and Ed Frauenheim
Thursday, July 29 2004 11:16 AM
URL: http://www.zdnetasia.com/news/business/0,39044229,39188533,00.htm

Bangalore may be on the verge of overtaking Silicon Valley as the biggest IT employment region in the world on the back of the rise in offshore outsourcing, according to some estimates.

The high-tech Indian city, which is home to major Indian IT outsourcers, including Infosys, Tata Consultancy Services and Wipro Technologies, as well as many Western IT companies, now employs 160,000 people in the technology sector. IT accounts for 100,000 of these jobs, with the rest in business process outsourcing and call centers.

MS Shankaralinge Gowda, secretary of IT and biotechnology for the state government of Karnataka, said that the number of tech workers in the region will exceed 200,000 between 2004 and 2005, as IT and business process outsourcing companies continue to rapidly hire workers.

Gowda claims that Bangalore has already overtaken Silicon Valley, but the latest figures from California's state government Employment Development Department (EDD) estimate the number of technology workers in Santa Clara County, which is the heart of Silicon Valley, at 175,100 as of June.

Silicon Valley is not in danger of losing its stature as a tech leader, and it can benefit from competition overseas, said Sam Haddad, chairman of the Silicon Valley Engineering Hall of Fame and a consulting professor at Stanford University. Haddad said the region is seeing new growth in areas such as nanotechnology. "Silicon Valley is already beginning to reinvent itself," Haddad said. "I am very optimistic."

The county employment figures, based on U.S. Department of Labor state and area estimates, put the total number of people employed in Santa Clara at 819,900. The 175,100 tech workers are employed in computer design and related services; telecommunications companies; Internet service providers and Web-search portals; data processing, hosting and related services; and computer and electronic product manufacturing.

The 175,100 figure may not capture all the tech-related jobs in Santa Clara County. Some technology positions may show up in other statistical categories, such as employment services. For example, employment services would include an employment agency that might send programmers to work on a temporary basis for other companies.

Ruth Kavanagh, peninsula labor market consultant for Santa Clara County at the EDD, said that despite the Bangalore claim, Silicon Valley is experiencing employment growth levels similar to those in boom years.

"In recent months, we have seen significant improvement in the jobs situation. Between May and June [including non-tech jobs], we had growth rates very similar to those in 1998 and 1999. The county is gradually gaining back some of the thousands of jobs lost in the last couple of years," she said.

Kavanagh suggested the impact of offshoring may be overstated, referring to a separate report by the nonprofit Joint Venture: Silicon Valley Network earlier this month.

The shift of work to lower-wage countries is just one of a number of global forces affecting job creation and loss in the region, according to that organization's report.

Andy McCue of ZDNet UK reported from London.