There’s been an overwhelming amount of “news” in the past year about the growth of India’s technology sector. Much of the focus has been on the significant trend of US companies outsourcing jobs to India – starting with call center and data processing type jobs but accelerating in the past year to higher-end software development, engineering, and design jobs.
As the outsourcing of jobs to India has increased, there’s been the expected political backlash. Since it’s an election year, both Bush and Kerry are taking strong positions on this issue.
Independent of my views on Bush or Kerry, I believe the resistance (or opposition) to outsourcing is a simple case of protectionism. There are endless debates on this, but I’ve always felt that protectionism was a bad idea and violated the simple American concept of “land of the free and the home of the brave” (recognize that line?).
As a venture firm, we’ve spent a lot of time thinking about this issue. About a third of our software-related companies have some sort of “activity” in India. We’ve concluded that one of the highest leverage issues we will continue to and need to be facile with is the notion of a cross-border US / India company where some of the activity of the business is based in the US and some is based in India. One of our companies – Stratify – recently had a nice article published about it titled Stratify woos Indian BPO market.. Stratify is a US (California) based company, is run by a very smart and accomplished Indian named Ramana Venkata (BS from IIT Chennai, MS from Stanford) and has a mixed US / Indian management team. Stratify has been very effective at developing part of the engineering team in India and is now directly addressing the Indian market (as well as the US market).
This is a hard problem to optimize as the natural reaction of venture firms would be to “hop on the trend”. This is dumb – a deeper, more thoughtful approach is required that is based on both a real understanding of the issues as well as experience. Entrepreneurs like Ramana help us understand this better.