Wednesday, March 5, 2008

Yahoo Setting up New Lab in Bangalore, India

Washington Post reports that Yahoo! is setting up a new lab in Bangalore, the IT capital of India. Yahoo already have R&D operations in Bangalore, which is focusing on new products and engineering.

Yahoo Labs Bangalore will be a centre of excellence for next generation search and advertising technologies, focused on making the Web more relevant and simple for users and advertisers, Yahoo said.

The new Lab is going to headed by Rajeev Rastogi, who has moved from head of Bell Labs India.

I am not that surprised by this new development, because in late January Yahoo! had announced its decision to cut 1000 jobs in US. It was reported at that time, the job cut will significantly reduce costs and will help focus more in the important businesses for Yahoo!.

I would say, Yahoo! was looking for cutting high-cost jobs in US and wanted to move its operations into low-cost destination and India was the obvious choice.

In Bangalore, it would only cost them probably a quarter of what they pay in US for the same job. It makes sense for Yahoo!.

But this is an election year in US, and outsourcing jobs is still a bad word for the majority. It would be interesting to see if this move by Yahoo! will have any political backlash in the States.

Having all said, I would expect this job-relocation will have a positive impact in its financials next quarter after along time.

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