IBM Corp, the biggest foreign employer in India, will triple its investment in the country to US$6 billion by 2009, building on a network of call centers that support its global customers.
The investment by Armonk, New York-based IBM, among the biggest in India, was announced by chief executive officer Sam Palmisano in the southern Indian city of Bangalore yesterday.
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.
PHOTO: AP
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 US$2 billion, and hired more than 30,000 people in India, taking its staff in the country from 9,000 to 42,000 today.
"India and other emerging economies are increasingly [becoming] 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 yesterday 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.
IBM joins Microsoft Corp, Dell Inc and Wall Street firms in increasing investments in India to tap the country's skilled, affordable labor.
IBM's first-quarter sales in India, where it is the largest foreign employer, rose 61 percent, outpacing overall revenue growth of 4 percent.
The company on May 30 said it more than tripled the number of employees at IBM Daksh, an Indian operator of customer contact centers it acquired in April 2004, to 20,000 from 6,000 two years ago.
Dell, the world's largest personal-computer maker, said in March it plans to double its number of workers in India to 20,000 in three years. Microsoft said in December it plans to almost double its workforce in India to 7,000 in the next two to three years.
The companies are seeking to capitalize on cheaper labor and the strength of India's economy, which is growing at the fastest pace after China's among the world's biggest countries.
India will produce 382,000 engineering graduates in the year ending March 31, according to National Association of Software and Service Companies.
The average software programmer salary in India is US$7,500 a year, compared with US$65,000 in the US, according to researcher NeoIT Inc.
IBM started selling computers in the country in 1951 until it was forced out in 1978 due to political unrest. It returned in independent operations in 1999. But the company's real momentum came after 2003 when it began making India a key base to support services for clients around the globe.
The expansion in India -- where it already has five software development centers and a center to provide consulting services worldwide -- has not only helped IBM cut costs by tapping low cost labor, but provided new revenues.
The company's revenues from India has averaged an annual growth about 50 percent 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.
IBM's profit had teetered from US$8.1 billion in 2000 to US$3.6 billion in 2002 before rising to US$7.9 billion last year.
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