Yahoo! earned upwards of 9 billion dollars in cash through the recent IPO of Alibaba group. This left Investors worldwide including those in India anticipating how Marissa Mayer’s would spend it. The cutback of 400 jobs in the US-based search giants Bangalore office was the last thing anyone expected. Yahoo! spokespersons assured that, inspite of the cutbacks India, the country and its Bangalore office remained an integral part of their long term plan. However, news has revealed that this cutback is a part of Yahoo!’s aim to reduce India’s currently prominent role eventually, to that of support functions only. The cutback of 400 employees come’s after a year long hiring freeze that was on-going in the Bangalore office.
This news comes shortly after Nokia announced it would be shutting down operations in it’s Chennai based handset-manufacturing plant on November 1st 2014. In a press release, the Finnish group blamed the closure on an asset freeze imposed by the Indian Tax department. The foreclosure of this plant had a severe effect on Nokia’s negotiation with Microsoft and was eventually left out of the 7 billion dollar deal, where Nokia’s handset manufacturing division was acquired by Microsoft. Nokia’s Nightmare experience is one of the main reasons why other tech giants have ended their experiment of off-shoring to India.
India has always struggled with corruption and bureaucracy, but the allure of skilled software and hardware engineers at reasonable cost’s exceeded the cons, until recently. The exit of Tech magnates such as Yahoo! and Nokia marks the start of the eight-year off shoring downfall in India that was predicted by the Hackett group in 2012.
In a recent report published by Frost and Sullivan India is the worst performing out of BRICS economy in the IT field.
The Indian Prime Minister, Shri Narendra Modi ji’s recent visit to America is an attempt to revive India as a hub for technological growth. During the visit he declared that India and the United States have to act as allies in terms of technological development.
The Prime Ministers meeting with Mark Zuckerberg this week is another step in making India attractive again globally to firms as an option to build their base in.