July 05, 2007	Thursday	Jamadi-us-Sani 19, 1428

NEW DELHI: Jobs once outsourced to India are now moving back to Silicon Valley, courtesy the increasingly expensive software pros in Bangalore.

The image search company Riya has pulled its research and engineering operations out of the country to consolidate in the US. The company behind visual shopping website Like.com had offices in both Bangalore and the US, however, the rising employee cost in Bangalore prompted this Silicon Valley start-up to save money by closing its Indian engineering centre and move the jobs back to California.

In April, the company closed its Bangalore operations and consolidated operations back in the company’s Silicon Valley headquarters.

In a blog posting, company’s chief executive Munjal Shah, complained, “Bangalore wages have just been growing like crazy. To give you an example, there is an employee of ours who took the first five years of his career to get from one per cent to 10 per cent of his equivalent US counterpart.

“He then jumped from 10 per cent to 20 per cent of his US counterpart in the next one year. During his time with us (less than two years) he jumped to 55 per cent of the US wage. In the next few months we would have had to move him to 75 per cent just to keep him at market.”

The image search company maintained offices in both Bangalore and the US as low wages and India’s strong pool of talent meant a significant high ROI for the company. However, the constant increase in Bangalore wages had “destroyed the ROI” that was the purpose for maintaining the otherwise difficult two-continent operation, writes Shah in the blog.

Shah predicts that other companies with similar offshore operations would also face problems as wages rose.

Shah noted that unlike Silicon Valley employees, employees in Bangalore did not value stock options highly, preferring an increase in cash wages instead.—Dawn/The Times of India News Service