New Report Documents Bay Area-India Ties

SAN FRANCISCO - (BUSINESS WIRE) - A new report by the Bay Area Council Economic Institute, "Global Reach," documents the deep connections between the economy of the San Francisco Bay Area with India. More than two years in the making, and based on nearly 200 interviews with business and community leaders, the study assesses the unique ties linking the world's innovation capital with its fastest growing major economy after China.

Within the Bay Area, the report assesses the contributions of Indian immigrants in building the region's economy, from the founding of many of Silicon Valley's leading technology companies - such as Sun, Brocade, Cerent and Hotmail - to the creation of venture capital firms that continue to support entrepreneurs and technology start-ups. As a measure of its success, the median income in the Bay Area's Indian community is more than $107,000, 75% of adults have at least a bachelors degree, 70% are in management or professional positions, and roughly half are homeowners.

The report finds that the Bay Area's impact in India is also deep. Most of the region's leading technology firms have R&D centers or other partnerships in India, and Bay Area venture capital firms have led the investment charge into India. For example:

• Visa has issued more than 30 million debit cards and 32 million credit cards to Indian consumers;
• India is Oracle's fourth largest global market;
• India hosts Symantec's largest engineering site outside the US, and works on more than 80% of its products;
• India accounts for one third of Adobe's global engineering workforce;
• More than half of India's developer community works on Sun platforms;
• Hewlett Packard is the largest player in India's IT market;
• Levi Strauss has 450 exclusive outlets in 80 Indian cities
• Cisco's second global headquarters is in Bangalore;
• eBay counts 2 million regular users in 670 cities and 10,000 dealers across the country, and an item is sold every minute in the company's India website;
• San Francisco-based Draper International launched the first India-dedicated venture fund;
• Silicon Valley-based Evolvence India Life Science Fund is the first India-dedicated fund focused on biotechnology;
• More than 40 Bay Area venture firms have Indian leadership and/or activity in India.

Underlying this two-way activity, the Institute finds several major trends that are transforming the global economy and India's role in it. In recent years India's technology economy has progressed from activity based primarily on the offshoring of back-office jobs and writing software code, to a more sophisticated role where Indian IT companies are taking on more complicated tasks such as systems integration and end-to-end product development. Wage arbitrage (trading on high-volume work and lower wage scales) is becoming less important, while more complex, specialized work is increasing. According to Bay Area Council Economic Institute President & CEO Sean Randolph, "Many people still think India is all about offshoring and low wages, but the reality has changed dramatically. India's growing capacity for high-end services, research and product development is transforming it into a global technology hub, and deepening the quality of its global partnerships. In the process, India and its companies are becoming more deeply embedded in Bay Area companies' global strategies."

Another trend the report identifies is the emergence of a middle class of 200-300 million consumers. Reflecting this, Bay Area companies are increasingly using India not only as a base for global markets, but also to meet India's growing demand for everything from designer clothing to computers, urban planning and architectural design services, financial services, infrastructure development, education, tourism, software and cleantech. Investment by Bay Area VCs is flowing into everything from on-line gaming to fast food franchises.

By identifying which Bay Area companies and organizations are active in India and their views of India's economic future, the report finds both opportunities and issues for companies looking to tap in to India's economic growth. The combination of Bay Area innovation and capital with India's engineering talent, it finds, can be a formidable one in global markets.

To realize that vision, however, two domestic issues must be addressed. One is immigration reform: many educated Indians who once planned to stay in the US and contribute to its economy are returning home, as entrepreneurial opportunities grow and the immigration climate in the US becomes more difficult. Institute President Sean Randolph observed, "An Indian with an advanced degree can wait as long as five years before his or her application for a green card (permanent residence) is even considered. This makes no sense when opportunities in India are beckoning and other countries are aggressively competing for the same talent. We need a new approach to immigration in this country that seeks to attract and retain highly skilled immigrants, not push them away."

Dramatic improvement is also needed in the quality of math and science education, to ensure that Americans are prepared to both cooperate and compete with their Indian counterparts. Investment in institutions of higher education such as the University of California is also critical, to ensure that California and the Bay Area are in a strong position to compete based on technology and innovation. Bay Area Council President & CEO Jim Wunderman notes that: "Education is one of the most critical challenges that we face, and directly impacts our ability to globally compete. If our students lack the basic skills that can increasingly be found in other countries, if our workforce lacks the ability to respond quickly to the pressures of innovation and changing markets, and if we fail to fund our public universities, our ability to hold our own with countries like China and India will slide, and in the end California and the Bay Area will pay the price in jobs and growth."

The Bay Area Council Economic Institute is an public-private partnership of business, government, university, labor and other leaders that works to support a competitive economy in California and the Bay Area through agenda-setting economic research and public policy initiatives. The executive summary and full text of the report can be accessed on the Economic Institute's website at www.bayareaeconomy.org.

Bay Area Council
Sean Randolph, President & CEO, Bay Area Council Economic Institute
415-946-8722
sean@bayareacouncil.org.
John Grubb, Senior Vice President for External Affairs, Bay Area Council
415-946-8705
jgrubb@bayareacouncil.org