Microsoft runs to India for cover - plans to expand heavily - flag for end of IT boom?
By Srini Ranganathan, Special Correspondent
November 16, 2004

Microsoft Chairman and Chief Software Architect Bill Gates

After distributing unprecedented amount of Cash ($3 per share), Microsoft finally joined the band wagon of US IT companies running for cover to India. “When a company loses the pricing power and lacks cutting edge innovations to command demand and pricing, it turns to low cost labor and distributes the cash its holds to the shareholders in fear of making further mistakes and losing it all!” says IT experts. India and especially Hyderabad meanwhile is enjoying the imported jobs. 

Microsoft’s recent action says it is nervous about the future of cutting edge mind boggling IT in the world. 

Microsoft Corp. will hire several hundred new staff at its new Indian campus in the next year, its chief executive said on Monday, in a move aimed at strengthening its presence in Asia's fourth-biggest economy.

The world's largest software maker inaugurated the campus, its biggest outside the United States, at a ceremony on Monday. Microsoft employs some 800 people in product development and support services in the southern Indian city of Hyderabad. India's low-cost, IT-savvy and English-speaking workforce is attracting a growing number of multinationals, such as International Business Machines Corp. (NYSE:IBM - News), to set up shop in India or outsource work to the country. 

The $12.5 billion software services industry has created some 550,000 software and 280,000 back-office positions, and the sector is growing at more than 30 percent a year.

"I am quite sure of hiring hundreds over the next 12 months," Microsoft Chief Executive Steve Ballmer told reporters when asked of his plans for recruiting in India.

"The work we are doing here is not low level. It's very high-level creative engineering." Ballmer said plans to hire locally would not mean the loss of jobs in the United States. "There are so many growth opportunities in our business that we can invest both in Hyderabad and, at the same time, continue making many more hires (at) our headquarters." Infosys Technologies Ltd., one of India's leading beneficiaries of increased outsourcing of software work, announced an initial $8 million joint investment with Microsoft to develop products that would help businesses reduce technology costs. Infosys, which said new products would support Microsoft .NET software, has rapidly expanded its Microsoft related business in the past five years and expects new software and consulting opportunities from the enhanced relationship. Its stock rose $2.91, or more than 4 percent, or $68.81 in late morning Nasdaq trade. Microsoft climbed 44 cents, or 1.6 percent, to $27.33. Microsoft's new 28-acre campus, part of a three-year, $400 million investment plan for India announced in 2002, will house its India Development Center and a global delivery center. Separately, Ballmer said he expected $400 million in revenue from SharePoint, its real-time information product, though he did not specify the timeframe. "SharePoint is the number one product at this point in the history of Microsoft," he said in a presentation to software professionals in Bangalore, India's IT capital. "We expect $400 million revenue from that product line, faster than any other product in Microsoft's history." Ballmer also said he had been misquoted in a recent report on making personal computers (PCs) available for $100 apiece in countries like India and China, where PC penetration is relatively low.