The Hindu : Why AOL expands in India, lays off in U.S.

Online edition of India's National Newspaper
Thursday, Jul 17, 2003

Business

Business

Why AOL expands in India, lays off in U.S.

By Anand Parthasarathy

BANGALORE JULY 16 . A search at the news site of google.com today on the key word "AOL'' is an interesting exercise — and a pointer to how the `garam hawa' is blowing in the globalised information technology industry: Two sets of news stories are highlighted:· In Bangalore yesterday Maneesh Dheer, Managing Director, AOL India Member Services, announced that the Bangalore-based customer support centre, exactly one year old and already the largest of America On Line's eight such facilities would be expanded from 1,500 to 1,900 persons by year end. It was now handling 10 million calls a year and would soon broaden its activities to include product and content development.

On the same day, the U.S. media was reporting from San Francisco that the parent company AOL-Time Warner was laying off 50 people from its `Netscape' unit and ending ties with the Mozilla project, the development arm that was fuelling Open Source web browser developments.

Seasoned technology commentators like Dan Gillmor of the `San Jose Mercury,' predict today that this is in all probability the final kiss-off for `Netscape,' the pioneer among Internet browsers that AOL acquired in November 1998. AOL has just taken a seven-year licence for the rival `Internet Explorer' browser, from Microsoft — which looks very much like a case of `sleeping with the enemy.' However, as a parting gift, AOL is creating a Mozilla Foundation with $2 million as

seed money — so there is hope yet for the Open Browser movement though `Netscape' itself may be doomed to fade away, after its current avatar, Version, 7.1.

AOL's belt tightening on its home turf — and simultaneous expansion at outsourcing locations — is symptomic of the IT industry's current crisis and opportunity: Crisis for operations in mainland U.S., where the promised upturn after the turn-of-century meltdown is yet to manifest; and opportunity for destinations like India where low per-transaction costs and a ready high quality human resource combine to create a compelling business outsourcing proposition.

Only a day prior to the AOL announcement, Yahoo!, the market leader in portals opened its first development centre outside the U.S., in Bangalore — with a promise to ramp up the number of engineers to 150 by next year.

And this news came on a day when the latest US Census data revealed that among the 242 biggest losers of population — due to job losses and industry slowdown — were San Francisco, gateway to the Silicon Valley where numbers shrunk by 12,000 or 1.5 per cent between July 2001 and July 2002.

The other bigger losers were two other icons of the Silicon Valley boom days, Sunnyvale and San Jose, which have lost 1.4 and 1.1 per cent respectively, of their population in the same period. They have not all moved to Bangalore — but there is a perceived correlation somewhere — which might explain last week's efforts by U.S. legislators to change the visa regime drastically to prevent a broad class of professional visitors from coming in.

Commentators are already characterising such moves as a case of shooting oneself in the foot to prevent the other guy from running too fast.

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