News: IBM to invest $6 bln in India over three years
IBM said it planned to expand its services, software, hardware and research businesses in India, where it is already the largest multinational firm with 43,000 staff in 14 cities, up from 4,900 in 2002.
"India and other emerging economies are an increasingly important part of IBM's global success," Samuel Palmisano, the firm's chairman and chief executive, told a meeting of more than 10,000 employees in Bangalore, India's IT hub.
"IBM is not going to miss this opportunity."
The cash, almost triple the $2 billion that IBM has invested in India over the past three years, is the biggest investment by a multinational firm in India in recent years.
It dwarfs the $3.9 billion combined investment announced last year for India by three U.S.-based companies - Microsoft Corp., Intel Corp. and Cisco Systems Inc..
International Business Machines Corp. of Armonk, New York, is among a growing number of multinational companies boosting investments in India, whose economy expanded nearly 8 percent last year as demand surged for its vast pool of English-speaking and relatively low-wage technical workers.
ONE-STOP SHOPPING
Palmisano said IBM's plans in India include centres to automate information technology services and provide clients with "one-stop shopping" for hardware information and products.
IBM said it would develop a telecommunications research and innovation centre at its laboratory in Delhi and establish a hub linking IBM consultants, developers, engineers and researchers.
The firm opened this year a centre in Bangalore that combines its business consulting, research, software and hardware capabilities to help customers improve supply chain functions.
In 2004, IBM bought Daksh, an Indian back-office consulting business that now employs about 20,000 people, for $160 million.
Although IBM does not reveal its Indian sales figures, some estimates have pegged them at more than $1 billion. Revenue has been growing at high double-digits over the last six years.
"IBM is excited by the opportunities in India over the long term and we are also encouraged by the domestic opportunity that India offers," said Palmisano, on his fourth visit to India in as many years.
The company employs more people in India than in any country outside the United States, with its workforce in the South Asian country exceeding IBM's combined strength in Brazil, China and Russia.
IBM's business in India grew 61 percent in the first quarter compared to a year earlier, the firm's highest growth rate among emerging economies. India's $15-billion domestic market for services and hardware is expanding at about 25 percent a year.
This, coupled with a global reputation for developing software cheaply, encouraged IBM to hire 15,500 staff in India last year even as it shed roughly 10,000 in Europe.
BILLIONS UP FOR GRABS
Although there is an escalating fight between tech companies for talent, wages in India are still a fifth of salaries paid in many western countries. IBM serves 225 clients globally from Bangalore, and nearly 16,000 work in the southern Indian city.
Palmisano said on Tuesday India would have 21 million college graduates by the end of the decade.
India's software services sector is likely to grow by more than 25 percent for the year to March, 2007, on rising demand for outsourcing, according to an industry body.
Contracts worth a combined $100 billion are coming up for grabs over the next two years, the body estimated recently.
In information technology consulting, IBM's competitors in India include Tata Consulting Services Ltd., Infosys Technologies Ltd., and Wipro Ltd..
Computer services such as consulting, outsourcing and system maintenance accounted for $47.4 billion of IBM's revenue last year of $91.1 billion.
The company in April reported a 22 percent increase in first-quarter net income on lower costs and increased sales of advanced microprocessors for video game machines.
posted by InCar Group Press Room at 12:15
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