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."

Comments

I'd be curious to know...

[madman101]

how much money they are making in India now. I suspect this is just a reasonable investment for such a big market.

Re:MA and OpenDoc

[thinkmast]

Well...they had to catch up intel announcement yesterday that they are investing $1billion in india: http://www.indianexpress.com/full_story.php?conten t_id=83365

I wonder if . . .

[EraserMouseMan]

Demand will begin to outpace supply in India's IT sector causeing the price of IT skilled labor to increase. If so it will reduce India's competitive advantage and less Indians will see any advantage to coming to the USA.

Re:I wonder if . . .

[gatkinso]

China already outsources some of its low end manufacturing to Vietnam citing lower labor costs.

Translator?

[Godeke]

Of course India is going to be important: the US universities have finally been surpassed by several other countries in the creation of degreed workers. It only makes sense that a large population country that modernizes would be able to eventually do so. I think we are on the cusp of a real shift in power to Asia from the western countries.

Meanwhile...

I never thought with so little product companies software services sector will grow so strong as it has grown here.

Whisky Tango Foxtrot does that mean? I'm not pedantic about language, but that's just absurd. Perhaps the true impact of this shift will be the reduction of English to verb tense confused propaganda?

Re:for that kind of money

[SatanicPuppy]

I actually got the response, "You don't need to know that" once. Sure, it was a relief after waiting almost an hour to get through, to ask a question that SHOULD have been available on the company website (Dell) anyway, and THEN have the individual on the other end tell me that I didn't need to know, but by that point I WANTED to know, and BADLY so I could jsutify the chunk of my life I'd wasted!

I still don't know, by the way. You'd think it'd be easier to figure out what an LED error code meant.

Sorry, but I find this to be insulting

[WidescreenFreak]

Can someone please explain to me why Microsoft feels the need to do this? Okay, application development is something that probably commands a higher salary in the U.S., but customer service?

I have a really big problem with companies that continually fork out technical support overseas. Regardless of location, just about everyone will need to be trained and learn the products that they have to support. Americans are no less capable of this than anywhere else. But keeping tech support in the U.S. has many benefits with respect to customer service that I think outweigh the cost savings.

Obviously, we have language difficulties when outsourcing. The Indian accent can be incredibly thick and very difficult to understand. I'm very adept at deciphering thick accents, but the Indian accent I find to be even more difficult at times than a thick, Scottish brogue. That certainly does not make the customer support experience any more pleasant.

Additionally, technical support nowadays is often nothing more than reading down a checklist of "did you do this?" Yes, I did before I called. "Well, let's try it again." *groan* Fine. "That didn't work either? Then let's try this." Face facts - anyone can do checklists for troubleshooting. Why is that being off-shored?

What's really infuriating about this announcement is that Microsoft is doing this as Louisiana and Mississippi are attempting to rebuild. You hear continual complaints about how companies are not moving back which can make sense from a manufacturing standpoint where large, capital investments of machinery and transportation need to be made; but from a services point-of-view, putting tech support and other business opportunities in Louisiana and Mississippi can still be cost-effective since those areas have incredibly low standards of living relative to the rest of the country. Then of course Microsoft would have the positive PR of (A) helping to rebuild an area that needs to be rebuilt, (B) having people who at least have an easier-to-understand (for the most part) accent on the other end of the line, (C) providing at least some type of jobs to an area that so desperately needs them, particularly now. Yes, I'm sure that hiring workers in LA/MS is still more expensive than India, but there's more to being a stable and respectable company than making the bottom line as large as possible. (I know, I know. Using "respectable" to represent Microsoft left a bad taste in my mouth, too.)

Am I being too idealistic? Well, perhaps. (Hey, at least I admit it.) But it just seems that Microsoft is missing a major opportunity here to do some good right here at home just so save some money that, frankly, it doesn't need to stay afloat. Hell, how large was its profit last year?

Take econ101 1st, and toss in some biz school

[Red Flayer]

" The expanding into Asia and Europe is hardly synonymous with outsourcing."

You're right, but the word you are looking for is offshoring, not outsourcing. If the product is being consumed here in the US, but made elsewhere by a company located in the US, that is offshoring. Outsourcing is something totally different, and doesn't apply to this .

" The key markets for information technology in the next few decades are not the US, Western Europe or Japan'

You mean, the key emerging markets. IT will still be bigger in the 'western world' + Japan for a while, but it's a lot more developed already, and has less opportunity for an entering player and/or initial sales.

"So, as a manufacturer, you simply enter new markets by lowering your costs until the real masses, the billions, can afford your products."

You mean, you lower your prices. Lowering your costs is not so simple, it doesn't automagically happen as a given over time. But, in essence, you are saying you need to lower your costs so you can lower your prices to be competitive in a poor market while maintaining profitability, right?

"The answer to how it remains profitable is simple, volume."

Again, not so simple. Yes, volume helps, since then fixed costs are diluted with respect to each unit sold. However, your marginal cost of each item sold doesn't change just because you increase your volume -- and labor, raw materials, and energy are not remotely free.

What's really driving the prices of hardware down is a reduction in production cost, based on new manufacturing processes and new designs using cheaper raw materials.

All increasing sales volume does is enable you to remain profitable while pricing your goods at a point closer to your marginal cost of production -- you can pretty much remove the cost of, say, administrative salaries, from your P&L analysis.