CEO Steve Jobs may have a soft spot for India, but the economic reality is, building a technical support center there doesn’t make sense

Apple Computer CEO Steve Jobs has always had a thing about India. While he was a young technician at game developer Atari in the mid-’70s, Jobs took a break and backpacked around India with a college friend in search of spiritual enlightenment. Not long after returning to the U.S., his more capitalistic instincts primed, he and Steve Wozniak launched Apple in 1976. Today, Jobs is known in India and through much of the rest of the world as an entrepreneur-turned-billionaire and one of the savviest marketing minds on the planet.

He is also a tough-minded executive who knows when to cut and run when the numbers don’t add up. That’s why Apple has shelved plans to build a sprawling offshore technical support center in Bangalore. Just months ago, there was talk of Apple employing 3,000 workers by 2007 who would handle technical and customer-service support for Macintosh computers and other Apple gear in India and elsewhere. There was even speculation that Jobs would travel to India in the fall to publicize Apple’s commitment to the country.

It wasn’t meant to be, and a small, newly hired staff of about 30 at Apple’s subsidiary in Bangalore was let go recently. (The company will maintain a small sales and marketing arm in the city.) Apple spokesman Steve Dowling would only say the company had “reevaluated our plans” and decided to focus support center activities in other countries.

However, another source familiar with the situation said the decision was mostly cost-driven. “India isn’t as inexpensive as it used to be,” the source said. “The turnover is high, and the competition for good people is strong.” The company feels it “can do it more efficiently elsewhere.”

Such talk comes amid concerns about the sustainability of India’s fast-track economy. True, India’s economy grew 9.3% last quarter, and it is still home to the world’s largest, fasting-growing offshore outsourcing sector, which generates about $17.3 billion in revenues and employs nearly 700,000 people, according to the McKinsey Global Institute. And Indian outfits such as Infosys and Tata are among the best-managed companies in the emerging markets.

http://www.businessweek.com/globalbiz/content/jun2006/gb20060605_273412.htm?chan=tc&chan=technology_technology+index+page_more+of+today’s+top+stories

Tags: offshore outsourcing | Apple