IBM's Systems and Technology Group to Invest Heavily in India

Published: June 19, 2006

by Timothy Prickett Morgan

No, I didn't take that trip to India to hang with Sam Palmisano, IBM's chairman and chief executive officer, but I did catch wind of what Big Blue plans to do in India as it seeks to capitalize on opportunities in the East. To put it simply, IBM might be firing big-time in the United States and Europe--remember the 14,500 layoffs from last summer?--but as far as India is concerned, it is hire, hire, hire.

Palmisano said that IBM has 43,000 employees in 14 cities in India, making it the largest single country aside from the United States to have its citizens also be IBM employees. He explained that the company had invested over $2 billion in the past three years, and would triple that investment in the next three years to $6 billion. "India and other emerging economies are an increasingly important part of IBM's global success," Palmisano explained. "If you are not here in India, making the right investments and finding and developing the best employees and business partners, then you won't be able to combine the skills and expertise here with skills and expertise from around the world, in ways that can help our clients be successful. I'm here today to say that IBM is not going to miss this opportunity."

These words probably struck more fear than joy into the hearts of techies in IBM's other facilities. I wonder if he might make the same trip to Endicott, New York, where IBM was founded and where some of its best technology was invented. IBM could colonize its old stomping grounds, using government money and the help of several state universities in the area--which prospered in part because IBM was such a strong force there for so many years.

But the India food in Binghamton, the local city near Endicott, is probably not so good; and, to be honest, neither is the Indian food that I am eating on a late Friday night in New York as I work my usual long hours to help American productivity. (It's OK, but I bet the curry is a lot better in Bangalore.) And no matter how economically depressed Endicott is, thanks to the abandonment by IBM and others, you can't pay workers as little as you can in India.

Palmisano was not terribly specific about how that $6 billion would be spent, but the Systems & Technology Group, which makes IBM's chips, servers and storage, is opening an innovation, development, and briefing center in Bangalore. And IBM is boosting its Linux investments in India, too. Right now, IBM India has the company's third largest pool of Linux developers.