IBM Plans to Invest $6 Billion to Expand Services in India

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 that the investment would 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 workforce in India but he did not specify numbers.

In the last three years, the company has invested more than $2 billion in India and increased staff to 43,000 from 9,000, 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 U.S., which has 125,000 of IBM’s 330,000 people.

Armonk, N.Y.-based IBM 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 firms, 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.

The announcement follows similar plans by other technology companies.

Microsoft Corp. said in December that it would double its workforce in India with an investment of $1.7 billion in four years. Around the same time, Intel Corp. announced a $1-billion India investment plan, weeks after a group of expatriate Indians said they would spend $3 billion to build a chip-making facility with technology from Intel rival Advanced Micro Devices Inc. Cisco Systems Inc. plans to invest $1.1 billion in India over the next three years.

IBM shares rose 70 cents to $79.76.