BENGALURU – In India’s most advanced cities, US companies are racing to set up more and bigger offshore campuses – fully staffed offices with high-skilled Indian professionals, performing functions vital to global business.
The concentration is most stark in parts of Bengaluru.
Mr Apul Nahata of RapidAI, a Silicon Valley-based medical technology company that uses artificial intelligence to interpret brain scans, can look out the window of the office he leads in India and see a “density of companies” relevant to his work.
“If I walk a half-kilometre, I see Google, Qualcomm, Nvidia, Visa, Samsung and Amazon right here,” said Mr Nahata, who spent 10 years of his career in California.
He is especially tuned in to his neighbours in tech, but JPMorgan Chase has the biggest of these offices, with 55,000 workers spread across Bengaluru and four other Indian cities. Even all-American retailers like Target and Lowe’s have centres employing 4,000 to 5,000 Indians in Bengaluru.
Under President Donald Trump, the US is upending some of its most important trading partnerships. He is particularly irritated by the US$62 billion (S$83 billion) US goods trade deficit with India. Mr Trump has also complained about Indian workers without legal status.
But Mr Trump’s stated policy solutions – higher US tariffs meant to force India to lower its trade barriers and the deportations of immigrants – will do nothing to slow the evolution of the long partnership that binds together US companies looking for skilled workers overseas and India’s abundant pool of labour.
Twenty years ago, many Americans feared that the outsourcing of office jobs to lower-wage economies like India would mean fewer jobs in the US. Many kinds of jobs have moved overseas since then, and many of those have since been automated. But the American economy needs more skilled workers.
Now, many US companies are finding those workers in India.
As at 2024, there were about 1,800 offshore corporate offices in India, owned by hundreds of foreign-based multinational companies – most of them American. There are 1.9 million people in India working for foreign companies, with 600,000 to 900,000 more expected to join them by 2030.
Together, the offshore business centres in India earned about US$65 billion in 2024, surpassing the value of American imports to India. By 2030, they are expected to earn US$100 billion or more.
Across India, these foreign-owned offices are now the primary driver of commercial real estate. An estimated 50 new ones were established over the past year. The expectation is that 100 more will join them during 2025.
This is welcome news for India, which needs 10 million new jobs each year just to keep unemployment in check. Even with stronger economic growth than any other large country’s, India’s enormous population of young people is in danger of falling behind.
The model for these offices has been around since at least the 1990s, when international companies started trickling into India, attracted by an educated middle class that could work for very low wages.
The business has changed a lot since those days.
Indian wages have picked up, and these offshore subsidiaries are no longer providing only low-value services. They are full-fledged branches of American headquarters, not just outposts, let alone temporary offices that provide outsourcing for information technology services. In fact, that sector announced a reduction of 64,000 jobs in 2024.
While salaries have gone up over the years, they are still about a quarter to a third of their dollar-adjusted equivalent in the US. Managers of these offices, known as global capability centres, acknowledged the savings, but they said multinational companies were just as drawn to the quality and abundance of potential Indian workers.
“Where else can you scale up with 2,000 engineers, or marketing professionals, within a year?” exclaimed one executive, who asked not to be identified because he was not authorised to speak publicly.
American companies are assembling their workforces in India mainly because it has become difficult to find the right kind of workers in the US.
Studies find that a third of all new engineering jobs go unfilled, while nearly 1.2 million Indians graduate with engineering degrees every year. Lower-wage American workers, who lost jobs as manufacturing work shifted to Asia, have been stranded without retraining.
Ms Deborah Kops, the managing principal of Sourcing Change, has been working on this kind of business, especially in India, since the early 1990s.
“We’ve got an inexorable trend right now, where enterprises understand that you can globalise the work,” Ms Kops said. She tried setting up global centres within the US but says that “we just don’t have the education engine” to staff them.
“Can you get 5,000 folks who know how to do this kind of work? You can’t,” she said. “But you can do it in India, and you can do it in other places in the world.” NYTIMES
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