updated 4/1/2004 5:03:47 PM ET 2004-04-01T22:03:47

Internet giant America Online, which has cut jobs on its home turf to deal with subscriber losses, is moving to save money by hiring employees and setting up a software development center in India.

Dulles, Va.-based AOL, part of Time Warner Inc., has set up a development center in the southern Indian metropolis of Bangalore, hiring about a dozen people for now, the company disclosed 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 statement released to The Associated Press.

A U.S. spokesman for AOL did not immediately return a call seeking comment.

The Internet company, which lost 2 million dial-up subscribers in the last few years, laid off 450 software developers in California in December and closed two offices in the state.

Now AOL is advertising in Indian newspapers, seeking software developers with varying experience profiles.

The company's statement did not make a link between its 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, but refused to divulge investment figures or hiring plans.

AOL follows competitors Yahoo! Inc. and Google Inc. in setting up operations in Bangalore to develop software that run various online services.

A shift to India can help American corporations save up to 80 percent in wages and operating costs. Having employees in Indian also helps U.S. firms work on a 24-hour cycle, due to the nearly half-day time difference.

Scores of firms have fired their U.S. employees to hire in India, brewing discontent among workers and politicians who say the United States must curb the practice, called offshoring or outsourcing.

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