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Microsoft to Invest $1.7 billion in India
piyushranjan writes "Bill Gates has announced that Microsoft will invest $1.7 billion in India over the next four years to expand its operations. The fund would also be spent in making India a major hub of Microsoft's research, product and application development, services and technical support for both global and domestic companies. Microsoft plans to create 3000 more jobs at India, taking it's headcount at India to 7000."
...as my right hand takes your wallet.
Cue the debate about US job losses and globalisation. The real issue IMO is the Microsoft tactics of using trade pressure to lobby for anti-competition legislation. "Yes, I'll invest 1.8bn, but only if you ban free software and enable software patents".
The truth is that India is capable of doing a lot better without this kind of "help". I encourage Indian politicians to reject any such pressure. Indian IT can compete securely on the open market, without favours or protectionism. Software patents, and other anti-competitive laws will only hurt India in the medium and long term.
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I expect Microsoft will be making similar investments in China too.
I see this as partly a defensive move - they know India and China are potentially two big markets for the future, and they don't want them considering OSS alternatives. They will use these investments to twist the governments arms. Although I don't think it will work with the Chinese, it might work in India.
The key markets for information technology in the next few decades are not the US, Western Europe or Japan. The key markets key, as in where the majority of goods will be purchsed and consumed-- are Mainlaind China, India, Eastern Europe and South America.
Where do I get that idea? Easy, hardware manufacturers. People in the wealthy nations often have a hard time imagining how hardware can get any cheaper and still remain profitable and yet it does relentlessly continue to decline in price. The answer to how it remains profitable is simple, volume. And that volume cannot and will not exist in the highly profitable and yet relatively sparsely populated wealthy countries. There simply are not enough consumers.
So, as a manufacturer, you simply enter new markets by lowering your costs until the real masses, the billions, can afford your products. And you can bet that WiMax is going to be one of the enabling technolgies that is going to make this push into the "third world" happen all that much faster.
Which means it makes perfect sense for Microsoft to have a real presence in these markets. In fact, you could argue they're moving too slowly.
But none of that has the slightest thing to do with "outsourcing". It's just the reality of where IT is going.
And Microsoft wonders why there are less and less people going into Computer Science and other Computer programs here in the States?
Let's see, population of approximately 1.1 billion... 7,000 total Microsoft jobs. Yes, I can see where that helps immensely!
India is poor, dirt poor. Even with the fairly decent number of jobs we've shipped there, it doesn't even begin to make a dent in the poverty level. And of course these jobs aren't available to the greater majority of the population, especially to the Dalit (formerly known as "untouchable") segment. Gates may be a big Kahuna in Africa but he isn't going to make much of a difference to India.
GetOuttaMySpace - The Anti-Social Network
Having worked with a software development group in India for 3 years now, I can honestly say I am not impressed. Many of the engineers there are well educated on paper, but in reality lacked creativity and the ability to work independently. They were definitely cheaper, but the price we paid for that was a huge cut in productivity. We needed 2-3x more of them to get the job of one engineer done here.
On the flip side, I also work with many Indians here in the US on my team. The differences are startling compared to their counterparts in India. They are much stronger in all aspects of engineering, whether its creativity or pure coding knowledge. It appears that the issues are somewhat cultural and will improve with time.
Good luck to Microsoft and the others, but we are scaling back our staff in India. It's just not worth it yet.
gasmonso http://religiousfreaks.com/Yes, it works out to $141k/yr... assuming they work on the side of the road with 2 sticks they cut themselves.
-Daniel
It's not exactly the most stable part of the world as it is.
Not exactly the most stable part of the world?
The only real problem that India has is with Pakistan, which is way up north, around the Himalyan mountain range. China, its other neighbor is an economic power in itself, the last thing either countries would do is do something that would affect their economies.
Are there troubles in India? Sure, take any region of a billion people of an astounding mix and variety of religion and culture, and introduce secular democracy - see what you get. Most troubles in India are just that - they are troubles.
That hardly calls forth a strong word like "unstable". Btw, India is a huge country, both in terms of size and in terms of populace. Just because a nation has a pacifist outlook does not mean they are to be underestimated. It would take a whole lot to unsettle, undermine or destabilize India.
Nice troll, though.
Microsoft I can see...Not like they're error free to begin with.
But Intel? Didn't they learn anything?
Time to buy some more AMD stock.
ad logicam Claiming a proposition is false because it was presented as the conclusion of a fallacious argument.
Microsoft (or any American company) investing overseas is not news. It's foolish to assume that there is such a thing as American protectionism, pride, etc anymore. Whether or not this is a good move will depend on how it effects future software. If we get better Microsoft software that's great they need the help. If not they wasted their money big deal. I'd love to say Microsoft is betraying it's American roots but quite frankly there's nothing left to betray.
Yeah, I'm sure this has nothing to do with India's move to open source software. And I'm sure Microsoft's investment will in no way affect the government's decision. No sir.
___
If you think big enough, you'll never have to do it.
From the comments, it seems the same low-brow ignorant red-neck racists on ZDNet have now infiltrated Slashdot. How sad. There was a time when discussions on Slashdot were mature and based on facts, not ethnocentric racist diatribe.
If that headline doesn't send MA a message on switching to OpenDoc nothing will
All the other crap about why MA should switch to OpenDoc I did not agree with. Totally did not (got modded down a bunch for my views also)...this reason, is a great reason why MA should drop office for OpenDoc. No reason to send our money to India...and what better way to penalize a gigantic business then by cutting off their gov't contracts.
I mod down so you can mod up. Your welcome.
it is a smart move for microsoft, look at their neibour, china.
With the skilled workforce of india and low cost and then less restrictive laws as such countries as china it would make perfect sense to be based in india for the middleeast and asia market.
my 2jiao
microsoft announces...
So it's really just a massive bribe?
Like: "We'll invest a piddly 1.7B USD in your country, to encourage acceptance, by developers."
Sure, can't miss. Apple pumped a lot of money into public schools 25 years ago and the Apple brand name was established. But... 25 years later they have a minor share of the market.
More like Microsoft will start sheadding headcount in Redmond over the next few years.
i get so choked up when bill gives away hundreds of millions of dollars for aids and malaria and stuff. i get so choked up, not because it's a great humanitarian effort, but because he's sucked up such a mountain of wealth and now their profit margins will likely increase.
A feeling of having made the same mistake before: Deja Foobar
Partly true, but then economics is a funny beast. Does the value of the economy of the USA suddenly drop when the dollar drops? Of course not. That is why GDP (PPP) is used rather than straight GDP. Both figures are in some ways misleading, but GDP (PPP) is felt to be the less misleading of the two, which I expect is why it is the figure the CIA world factbook uses it.
No the story should read: "Microsoft outsources to India: Press Paid-off to show in Positive Light".
Occam's razor is the blind faith in the natural selection of least resistance and in universal oversimplification. -- EF
When comparing size of economies, is it not more useful to use PPP? In this case no, but read on to find out when to use what metric.
If a person in New York pays 20$ for a haircut, and a person in New Dehli pays 2$, where is there more economic activity going on?
If you just use exchange rates, you learn something about how one economy has sway over another, or how much shove it has on the global economy, but you do not learn about how large an economy is, i.e. how much economic activity is going on within the country. For example, rapid appreciation of currency (e.g. Japanese yen after 1985 Plaza Accords, or the recent rise of the Euro versus the Dollar) does not change the size of the economy (the Europeans didn't suddenly get 30% richer when their currency valued versus the dollar between 2001 and 2003); it does change how powerful of an investor the country can be in foreign lands.
If you are not convinced, here is another example: look at consumption of natural resources. China is the second largest consumer of most resources, even the largest for some, but its economy by exchange rates is only 1.5$Trillion (5th largest AFAIK, about the size of Italy). When adjusted for PPP, you see how much economic activity is really going on: ~8$Trillion (second largest).
So, the GDP of India when measuring economic activity is 3.3$Trillion. However, like I said, when it does come to international transactions, GDP comparison at exchange rates is more useful. I still doubt MS can buy India though.
When you buy a product, where do you go? Do you buy it from the local mom and pop store? Do you buy it from the large local retailer? Do you buy a retail card or an OEM card? Do you search on the internet for the cheapest place to get it and buy it half-way across the country?
While I do not like outsourcing, I find that it is us (as a country) that needs to change our ways. Many of us (not all) are hippocritical in terms of outsourcing. We'll buy a product online from across the country when we could support our local community by purchasing it from a local store. Sure we save a few bucks, but we are "outsourcing" our consuming.
Why is it when a company looks for ways to save some money (think purchasing OEM online vs. purchasing retail locally) they are scolded when many of us (as consumers) do the exact same thing? Again, I am in no way advocating outsourcing. However, I have a hard time blaming companies for doing it.
From Wikipedia:
"The economy of India is the fourth-largest in the world as measured by purchasing power parity (PPP), with a GDP of US $3.36 trillion. When measured in USD exchange-rate terms, it is the tenth largest in the world, with a GDP of US $691.87 billion (2004)."
http://en.wikipedia.org/wiki/Economy_of_India
The $3.3 trillion figure sounded wrong to me, as that would put the per capita income here around $3000 -- I've been in India for the past 6 months, and it certainly seems lower than that. So the real figure is around $600 US per capita.
Believe me, the influx of money from the technology industry has had a major effect in India. New building are going up in droves, land prices are skyrocketing, people are moving from villages into the cities. $1.7 billion is no drop in the bucket here.
Like: "We'll invest a piddly 1.7B USD in your country, to encourage acceptance, by developers."
That amount is not piddly to India, if you look at average salaries. Even if someone was paid about 6 lakh average, that still only translate to about $13K to $14K USD per year. So, for 3000 workers, do the math - nearly 2bill is seriously significant.
Don't forget that offshore development implies there is a manager in the US. The success depends heavily on the manager, too. You can't reject the idea of offshoring only because it failed in one case.
The question shouldn't be "if offshore engineering works or not". There won't be a general answer because it will always depend on the type of products you make, people you work with, etc. Of course it will work, in some cases.
The question should be "if offshore works in our case", and "how we can make offshore succeed". There are many things you can do. Frequent communication, commitment from both sides to help each other instead of blaming each other, etc.
Or what about the even older older way: GDP (Dialup)?
I was going to use my last mod point to mark your post as funny. However, I felt it better to add my own post (just to help clarify, in the event some folks didn't get the joke...)
This space unintentionally left blank.
No matter how you cut it that's 7000 less high paying, easy on teh environment tech jobs in the US. The indians can work cheap because their economy is supported by indentured slavery and child labor. I too could afford to work two dollars an hour if my house was built by people who worked for pennies, and the bricks were made by people who were sold to the brickmaker and my clothes were made by 10 year olds working 15 hours a day and my garbage was taked away by untouchables.
The worst thing that can happen to India is to raise the level of human rights there, all the IT jobs would move to china.
evil is as evil does
Clue #2, there's more where that came from and they are cheaper where they are. It's easier to find bright people when you have a billion to chose from.
Currently, those you see here are more "motivated". When you have a chance to leave a $3 trillion economy for a $12 trillion economy with one quarter the population, or 16 times the wealth. People in India still starve to death, while "poor" people in the US are fat.
All this gets around the fundamental problem, the use of slave labor. Microsoft, like GE and other big dumb companies think they can use IP laws to keep control of the world without real intellectual effort. It's a suicidal betrayal to put research facilities offshore. Those that do are those that know. In time, they will develop better weapons systems than we have and the "slaves" will break free. What kind of neighbors they will be is largely dependent on how we treat them now. As big dumb companies have used such labor moves to threaten their own employees, the treatment of others is bound to be poor.
Friends don't help friends install M$ junk.
That amount is not piddly to India..."
You're right. Not to put words in the GP's err... post, but I think he meant it's piddly to Microsoft. I actually disagree with that. I believe it's a fairly significant investment - even for a company with such deep pockets. I would personally initiate a lot of research into an investment before I threw ~4 to 5 percent of my savings at it.
I do believe that the GP is correct that MS is doing this to stave off adoption of open source alternatives by the Indian tech companies - and their workers. It's a long-term thing so only time will tell whether or not this is a good strategy for them.
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