From today's New York Times - Intel and J.P. Morgan Chase to Expand Indian Operations:
Intel, the world's largest chip maker, and J. P. Morgan Chase, the global investment banker, said on Monday that they would outsource significant operations to India, an indication that more complex high-value work was moving here.
Intel, based in Santa Clara, Calif., will invest more than $1 billion in India over the next five years, with $800 million going to expand its research and development center in Bangalore, the company's chairman, Craig R. Barrett, said in a statement during a visit to New Delhi.
Intel's news followed the announcement in October that Cisco Systems would invest $1.1 billion and triple its work force in India to more than 4,000 from 1,400 in three years.
Intel's Bangalore center employs around 3,000 engineers who design and develop products. Mr. Barrett said Monday that its latest investment "demonstrates Intel's long-term commitment." Intel will invest the rest, $250 million, as venture capital in technology companies.
J. P. Morgan Chase said it would add 4,500 employees in India by 2007, mainly by setting up operations in Bangalore to support its growing structured finance and derivatives businesses globally. The company will hire a mix of recent graduates and experienced workers and will double the size of its operations in India. All 4,500 of J. P. Morgan Chase's current employees in India are based in Mumbai.
The bank made news two years ago when it became the first global investment bank to hire 35 equity researchers in India to support its operations on Wall Street.
"In our experience, we have found high-quality, low-cost staff in India, and we want to continue investing in the country," said Michael Golden, a spokesman for the bank who is based in London. "The investment is about meeting the growing needs of our business and not about shipping jobs from another location."
Wall Street firms and large global banks have been particularly aggressive in outsourcing work to India in recent months. UBS said it would open its first center in Hyderabad, with 500 jobs, in early 2006. Goldman Sachs has 750 people in its center in Bangalore but has a capacity for 1,500 employees.
"This is way beyond mere cost savings," Madhavi Mantha, a senior banking analyst at the financial consultancy Celent, said from Montreal. "Unless global banks are comfortable with the quality of work, they would not risk taking the work offshore."
J. P. Morgan Chase said the new employees would process complex derivatives settlements and structured finance transactions. The company will hire about 400 people a month. By 2007, it will have almost a third of its back-office and support jobs, or about 3,000, in India.
Offshoring of work to India has steadily risen in the last few years, despite political discomfort in the United States over the trend. Recently, high-end jobs in areas like chip design and complex product design have been added to the relatively low-end call center and paid-by-the-hour software coding work.
Though salaries in India are climbing rapidly for entry-level workers and top managers, Indian employees still earn less than a fifth of what their peers in the United States do.
(emphasis added)
And why is it that everyone thinks we can continue to compete by just throwing more educated people at the problem?
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