In a major endorsement of India’s IT capability, a recent report by the Santa Clara University said that about half of the jobs being outsourced by Silicon Valley companies are going to India.

More than 53 percent of Silicon Valley companies surveyed, reported that they outsource a portion, or all, of their operations. With roughly half of the outsourced jobs winding up in India, the country is set to benefit the most.

“India has an educated work force, and its people speak English, so this makes it an attractive place for outsourcing,” said Mario Belotti, an economics professor at the university. Other Asian countries reported to be trailing in the jobs race, includes China trailing at a distant second accounting for 8 percent of the outsourced jobs.

The survey tracked outsourcing by region over the last three years, and registered a slight decline in the number of companies taking jobs out of Silicon Valley over the last few months.

IT services, healthcare and communications are witnessing healthy outsourcing, while the manufacturing sector is witnessing a decline, Belotti said.

The percentage of firms reporting “no outsourcing done in the last quarter” has increased in the manufacturing sector, from 51.1 percent in 2003 to 60.7 percent in this year’s survey.

“Much of this drop was in the semiconductor and electronics area,” Belotti said.
In August, the Valley posted a 7 percent year-over-year increase in computing and electronics manufacturing jobs.

Only 14 percent of U.S. firms prefer India for low-cost outsourcing. India stands nowhere for low-cost outsourcing for European manufacturing firms, due to high cost and low quality when compared with China. Globally, companies intend to double their low-cost country outsourcing in the next three years and expect the savings from it to increase by 37 percent.