IBM to triple investment in India to $6 billion over 3 years

NEW DELHI — IBM Corp. plans to triple its investment in India to $6 billion over the next three years to take advantage of the country's lower-cost labor and diverse engineering skills for technology services customers around the world.

Chairman and Chief Executive Sam Palmisano said Tuesday the investment will expand the software, services and customer-support work IBM does in India, while also funding new service delivery centers in Bangalore and a telecommunications research facility in New Delhi.

Palmisano said IBM would increase its work force in India, but he did not specify numbers.

In the past three years, the company has invested more than $2 billion in India and increased staff from 9,000 to 43,000, helped by the estimated $150 million acquisition of Indian back-office outsourcing provider Daksh eServices.

Now Big Blue employs more people in India than any other foreign company. And India is IBM's second-largest base of operations, trailing only the United States, which has 125,000 of IBM's 330,000 people.

IBM, based in Armonk, N.Y., first opened for business in India in 1951 — though the operations were halted in the 1970s amid the then-ruling party's campaign against multinational corporations and didn't resume until 1992.

The real momentum came after 2003, when IBM 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.

IBM now has five software development centers in India along with an office to provide consulting services worldwide, helping Big Blue cut overall costs with less expensive labor and opening new connections to the fast-growing India market.

The new investments announced Tuesday "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 told 10,000 IBM employees and investment analysts at the company's facility in Bangalore. Indian President A.P.J. Abdul Kalam was present.

The trip to India included a briefing with analysts on IBM's global plans for next year, an annual talk ordinarily held in New York. The presentation was shifted to India to showcase the company's work in the country.

"If you are not here in India making the right investment . . . then you won't be able to combine the skills and the expertise here with skills and expertise around the world in ways that can help our clients be successful," Palmisano said. "I am here today to say that IBM is not going to miss this opportunity."

IBM shares rose 70 cents to close at $79.76 on the New York Stock Exchange.

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Contributing: Brian Bergstein