Global companies are increasing their focus on India, where labor costs are far lower than in the West, since they realize that white-collar work can be performed anywhere. They’ll create a dependable and affordable labor pool outside Bengaluru and Hyderabad, the two established technology centers. India will thus have numerous Silicon Valleys.
Fortune 500 firms, such as Germany’s Bosch and Walmart (WMT.N), are just as likely to look to India for artificial intelligence specialists as they are for back-office positions. Businesses depend more on domestic workers to complete more difficult engineering and research assignments.
To increase wire designs on aircraft, such as the Chinook helicopter, and reduce design time, engineers at Boeing’s (BA.N) Bengaluru base employed machine learning. The business is spending $200 million to build a new office near the airport. According to EY forecasts, the number of people employed by these global competence centers (GCCs) in India will more than double to 4.5 million by 2030.
Yet, cities like Bengaluru are becoming more expensive to operate in and are beset by infrastructural issues. Based in a single town, thirty percent of the workforce at India’s GCCs is now employed, according to research conducted by consulting firm Zinnov. Additionally, these workers typically leave their positions quickly.
The pandemic coincided with record demand for cloud services from multinational corporations and a rise in labor poaching by well-paid venture capital-funded firms. The average attrition rate increased to more than 22% in the fiscal year 2022 at India’s top three IT services companies, including Tata Consultancy Services (TCS.NS). As a result, locations like Jaipur, Coimbatore, Mysuru, and Ahmedabad are more alluring as developing hubs. According to Deloitte, companies can save up to 30% and 50% on talent and real estate expenses, respectively.
India will have a different difficulty replicating Silicon Valley’s success than American places like Austin and Miami. Even so, smaller towns are home to about 75% of the nation’s top 100 engineering institutions, including the universities attended by CEOs of Microsoft (MSFT.O), Alphabet (GOOGL.O), Satya Nadella, and Sundar Pichai. Since Indian laborers are youthful and adaptable, businesses can locate their operations anywhere in the country, and the talent will follow.
Companies are filling jobs quickly; as of August 2022, there were over 200,000 open vacancies in India for data scientists and AI specialists. Global corporations may find themselves dispersing around the South Asian region as they use technology to usher in the next generation of production. As multinational corporations utilize technology to usher in the next wave of production, they may also discover that they are dispersing throughout South Asia.
