America Online Sets Up India Operations

AOL confirmed that it has established a software-development center in Bangalore, following similar moves by major competitors Google and Yahoo.

InformationWeek Staff, Contributor

March 31, 2004

2 Min Read

BANGALORE, India (AP) -- U.S. Internet giant America Online, plagued by subscriber losses and American job cuts, is stepping into the software development market where many big companies come to save money: India.

AOL, based in Dulles, Va., has set up a software-development center in the southern Indian metropolis of Bangalore, hiring about a dozen people for now, a company spokesman said Wednesday. Many other positions have been advertised in local newspapers.

"Our development center will work in close coordination with our global offices in the United States and other locations on a variety of different product initiatives," the company said in a reply to questions from The Associated Press. No name was given for the spokesman replying to the questions.

The world's leading Internet company, which lost 2 million dial-up subscribers in the last two years and laid off hundreds of software developers in Silicon Valley three months ago, advertised in Indian newspapers seeking software developers with varying experience.

The company official did not make a link between AOL's troubles in the United States and its decision to move work to India.

AOL cited "the high pool of professional talent in India" as its attraction to the country. It refused to divulge investment figures or hiring plans.

AOL follows competitors Yahoo! and Google, who also have set up operations in Bangalore to develop software that runs various online services. Activities such as search engine optimization are also done in such centers.

A shift to India could help American corporations save up to 80 percent in wages and operating costs. Scores of companies have fired U.S. employees to hire in India.

This has also led to brewing discontent among American workers and politicians, who say the United States must introduce curbs against the practice.

A development center in India also helps U.S. companies work on a 24-hour cycle, because of the nearly half-day time difference.

"We will focus on delivering strategic products for AOL through close coordination with AOL's other development resources around the globe in various time zones and locations," the company spokesman said.

AOL laid off 450 software developers in California in December and closed two offices in the state. This came months after it laid off 50 employees at its Mountain View-based Netscape Communications unit.

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