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After 10 months of working with software developers in Bangalore, India, Bill Wood was ready to call it quits. The local engineers would start a project, get a few months' experience, and then bolt for greener pastures, says the U.S.-based executive. Attrition rose to such a high level that year that Wood's company had to replace its entire staff, some positions more than once. "It did not work well at all," recalls Wood, vice-president of engineering at Ping Identity, a maker of Internet security software for corporations. Frustrated, Wood began searching for a partner outside India. He scoured 15 companies in 8 different countries, including Russia, Mexico, Argentina, and Vietnam.

That path is being trod by a lot of executives, eager for new sources of low-cost, high-tech talent outside India. Many are fed up with the outsourcing hub of Bangalore, where salaries for info tech staff are growing at 12% to 14% a year, turnover is increasing, and an influx of workers is straining city resources. Even Indian outsourcing pioneers Tata Consultancy Services, Wipro Technologies (WIT), and Infosys Technologies (INFY), which have helped foreign companies shift software development and other IT operations to Bangalore, are starting to expand into smaller Indian cities, as well as China (see BusinessWeek.com, 11/14/06, "Patience is a Virtue in China, India IT Learns"). "Overall, in terms of productivity and quality of life, beyond Bangalore is better," says Wipro Chief Information Officer Laxman Badiga. "Bangalore is getting more crowded, and the real infrastructure is getting stretched."


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