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June 06, 2006
IBM to triple investment in India to $6 billion in three years
By RAJESH MAHAPATRA
AP Business Writer
The Associated Press
IBM (News - Alert) Corp. said Tuesday it would triple its investment in India to $6 billion over the next three years as the South Asian country becomes a cornerstone in the global network of the world's largest computer services company.
Chairman and Chief Executive Sam Palmisano said the investment will be used to build service delivery centers in Bangalore, India's technology hub, and create a telecommunications research and innovation center for IBM clients around the world.
Palmisano also said IBM would increase the number of its employees in Bangalore, without elaborating.
In the past three years, the company has invested more than $2 billion in India and increased staff here from 9,000 to 42,000. That makes India IBM's second-largest base of operations, trailing only the U.S., which has 125,000 of IBM's 330,000 people.
"India and other emerging economies are increasingly (an) important part of IBM's global success," Palmisano told some 10,000 IBM employees and investment analysts at the company's facility in Bangalore. Indian President A.P.J. Abdul Kalam was also present.
Palmisano was to meet later Tuesday with the analysts to brief them on IBM's work in India and its global plans for next year, an annual talk ordinarily held in New York.
The new investment "will ensure we make the most of the opportunities to grow this marketplace while it enables IBM to fulfill its vision to become a globally integrated company," Palmisano said.
"If you are not here in India making the right investment ... then you won't be able combine the skills and the expertise here with skills and expertise around the world in ways that can help our clients be successful," he said. "I am here today to say that IBM is not going to miss this opportunity."
IBM's announcement follows similar plans unveiled by other technology companies this past year.
Microsoft (News - Alert) Corp. said last December that it would double its work force in India with an investment of $1.7 billion in four years. Around the same time, Intel (News - Alert) Corp. announced a $1 billion India investment plan, weeks after a group of expatriate Indians said they would spend $3 billion to build a chip-making facility with technology from Advanced Micro Devices Inc., Intel's rival. Cisco Systems (News - Alert) Inc. also plans to invest $1.1 billion in India over the next three years.
Although IBM began its India operations in the early 1990s, the real momentum came after 2003 when it began making India a key base to support services for clients around the globe. The strategy was largely necessary to fend off competition from low-cost service providers based in India that were increasingly grabbing worldwide technology consulting business.
The expansion in India -- where IBM already has five software development centers and a center to provide consulting services worldwide -- has not only helped IBM cut costs by tapping less expensive labor, but provided new revenue sources as well.
The Armonk, N.Y.-based company's revenue from India has grown, on average, about 50 percent annually over the past two years. That, in part, has helped IBM's efforts to improve its bottom line despite tepid revenue growth in other parts of the world.
(source: http://www.tmcnet.com/usubmit/2006/06/06/1669937.htm)
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