IBM to Invest $6 Billion over Three Years in India

By Kumar Amitav Chaliha

TMCnet Contributing Writer

India’s position as a favorite global outsourcing services hub was further strengthened with computer services giant IBM (News - Alert) today announcing that it would invest $6 billion in the country over a three year period.

IBM chairman and chief executive Samuel Palmisano told a gathering of company employees in the southern Indian city of Bangalore that the funds would be utilized primarily to set up service delivery centers and build a telecommunications research and innovation center for IBM clients around the world.

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,” a press release quoted Palmisano as saying.

”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 has invested more than $2 billion in India in the past three years. The new investment will be triple that figure.

IBM’s plan underlines the increasing importance of India as an outsourcing hub. It follows similar announcements made by Microsoft (News - Alert), Intel (News - Alert) and Cisco Systems (News - Alert) late last year.

IBM’s $6 billion planned investment, however, is significantly more than the $3.9 billion combined investment announced last year by the other three U.S.-based companies. Microsoft is slated to invest $1.7 billion in India over four years, Intel $1 billion and Cisco Systems more than $3 billion.

New York based IBM has a staff of over 42,000 in India. It is the biggest multinational employer in the country.

Palmisano today said IBM would increase the number of its employees in Bangalore, without elaborating. Already over 16,000 IBM employees work out of its Bangalore offices.

IBM’s business in India grew 61 percent in the first quarter of 2006 compared to a year earlier.

India’s $15-billion domestic market for services and hardware is expanding at about 25 percent a year.

Here is a detailed list of the steps IBM will take to deploy the $6 billion investment in India over three years, as stated in the press release:

Set up the first in a new breed of service delivery centers in Bangalore, deploying new processes and technology that will greatly automate IT service delivery to provide clients with enhanced flexibility and increased worldwide access to skills, service offerings and continuous availability at lower cost.

Create the IBM Systems & Technology Group (STG) Innovation, Development and Executive Briefing Center in Bangalore, focused on IBM infrastructure solutions, technologies and innovations and providing performance benchmarking, testing, data migration and competency building capabilities.

Locate a Telecommunications Research & Innovation Center at its India Research Lab that will serve as a key resource to IBM's telecommunications clients around the world.

Increase the capabilities and staff of the High Performance On Demand Solutions Lab in Bangalore, a specialized software and services lab driving automation and virtualization of complex IT infrastructures.

Inaugurate "The Great Mind Challenge," which is designed to improve the software development skills of Indian students as they work to solve issues facing businesses today.

For more information on IBM visit www.ibm.com.

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Kumar Amitav Chaliha is a contributing writer for TMCnet.