IBM Announces $6B Investment in India

IBM will invest US$6 billion in India over the next three years, company Chairman and Chief Executive Officer Samuel Palmisano announced Tuesday in Bangalore, India.

The company is encouraged by the opportunity presented by the Indian market as well as the role Indian talent can play in making IBM a global enterprise, Palmisano told an audience of more than 10,000 employees.

IBM has about 43,000 staff in India, and is using the country as a base for offering services to its customers worldwide. It returned to India in 1992, after previously pulling out of the country because of government regulations prohibiting 100 percent foreign ownership of marketing companies in India.

Now, however, IBM is also seeing the local market for its products and services pick up. Its revenue from the Indian market grew 55 percent last year and 61 percent in the first quarter of this year, as a number of large Indian companies adopted outsourcing as a business strategy.

The investment in India is part of IBM’s strategy to grow its presence in emerging markets such as China and Brazil, both because these are attractive markets, and also because they offer vast pools of staff, Michael J. Cannon-Brookes, IBM’s vice president for business development in India and China, told reporters shortly after Palmisano’s speech. “You can expect significant investments by IBM in those countries as well,” he added.

IBM has invested $2 billion in India in the past three years. The $6 billion investment announced Tuesday will go toward cost of workforce, expansion of IBM’s facilities in the country, and projects such as education and health that the company is working on with the Indian government, said Shanker Annaswamy, managing director of IBM India. IBM did not, however, say how many additional staff it will be hiring in India. IBM’s Indian unit is already the largest of any country outside the United States.

As part of the investment, IBM is setting up in India the first in a new breed of IBM service delivery centers that deploy processes and technologies to automate IT services delivery, the company said. After the pilot is complete, the technologies will be rolled out across other IBM service centers. It is also setting up a telecommunications research and innovation center at its research lab in India. The new center will serve as a key resource for IBM’s telecommunications companies around the world, the company said.

-John Ribeiro, IDG News Service

For related news coverage, read IBM CEO Palmisano to Sell India Game Plan to Analysts.

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