WORM'S EYE

Thu Jul 29, 3:21 PM ET

Erika Morphy, www.newsfactor.com

Is Bangalore finally going to replace California's Silicon Valley as the world's I.T. employment center? New statistics from the Indian city suggest that, yes, its legions of I.T. workers soon may outnumber those in the Bay Area.

Bangalore employs some 160,000 tech workers, the vast majority concentrated in value-added I.T. occupations, as opposed to call centers or business outsourcing. These figures are within striking distance of Santa Clara County's I.T. employment rolls.

But such head-count comparisons are deceptive, to say the least. Outsourcing, while certainly touchy for many, is a nuanced and many-layered issue that goes beyond the seemingly bad news for one locale when another is chosen.

The Losers ...

For example, a study was released a few weeks ago that examined the effects outsourcing is having on the Bay Area. Sponsored by Joint Venture: Silicon Valley Network, the Bay Area Economic Forum and the Stanford Project on Regions of Innovation and Entrepreneurship, the study was conducted by the global management consulting firm A.T. Kearney.

Among other findings, the study notes that the Bay Area is losing ground to other regions in the U.S., as well as overseas, in three competitive capabilities: mass production, back-office (transactional) operations, and product and process enhancement.

"What people are shocked about is that there is now such a concentration of seemingly sophisticated jobs being offshored," John Ciacchella, vice president with A.T. Kearney, told NewsFactor.

But it should not be a shock, Ciacchella continues. Engineering, for example, is basically a very disciplined investigation process that, to a certain extent, can be replicated in a lower-cost environment. "Enhancing a product and testing a product --that is where we are losing engineering talent to other locales," he said.

... And Winners

But the Bay area has several competitive strengths that balance out the exodus of certain functions, Ciacchella notes. Two that are not often considered in the sometimes contentious debate about offshoring, he says, include the Bay Area's knack for coordinating and integrating research across industries and scientific disciplines, and its huge talent pool gifted in managing and coordinating globally distributed business functions and networks.

Cross-disciplinary research, says Ciacchella, naturally resulted from the cross pollination of disciplines that have developed in this little part of California. "It's not just technology but developments in bio tech and nanotechnology crossed with biotechnology," he says.

"This idea of crossed lines in the research community is a pretty interesting capability -- and in our interviews, it became clear this is a unique strength in the region," Ciacchella explained. "In other regions, the research activities are very siloed."

Integrated global business management is another skill set that has developed from California's unique business culture. "The Bay Area has been offshoring for years, as a matter of fact, and much of the workforce has developed necessary skill sets beyond geographic and corporate borders," Ciacchella said. "These are human resources that are key for all businesses now."