Microsoft to invest $1.7 billion in India

Microsoft will invest $1.7 billion in India over the next four years, Chairman and Chief Architect Bill Gates said Wednesday in Delhi.

The funds will be spent on Microsoft’s development operations in India and other areas in line with the company’s strategic vision for India, Gates told reporters in Delhi.

Microsoft joins several other multinational technology companies, such as Intel and Cisco, which are making large investments in India in anticipation of a boom in the country’s IT and communications markets.

Intel Monday announced that it will invest over $1 billion in India . Of this, $250 million will go to a venture capital fund in India and $800 million over the next five years for expanding its business in India, including its R&D center in Bangalore. The company has already invested more than $700 million in the country over the last 10 years, it said.

During a visit to India in October, Cisco President and CEO John Chambers said the manufacturer will invest $1.1 billion in the country over the next three years, including $750 million in expanding its R&D operations in India. The company also announced Monday a $10 million investment to support the Indian government’s e-governance programs, and an additional $50 million investment to set up a facility in Bangalore to house the company’s R&D, IT, sales and customer support staff.

Cisco is investing in India to take advantage of the country’s skilled manpower, and in anticipation of growing demand for its products, Chambers said in October. “In three to four years, the Indian market could potentially be larger than the Chinese market,” he told reporters at a news conference in Bangalore.

Gartner projects that total Indian enterprise IT spending, not including consumer IT spending, will reach Indian Rupees 1.09 trillion ($25.4 billion) by 2006. The spending will include hardware, software, telecommunications and IT services, according to Gartner.

On Wednesday Gates, who is on a four-day visit to India, told an Indian industry forum in Delhi that Microsoft plans to increase its staff in India to 7,000 from 4,000 over the next three to four years. It is not clear, however, whether the staff will all be employed by Microsoft or will also include staff at outsourcing companies in India that do work for Microsoft.

During a visit to India in 2002, Gates said Microsoft plans to invest $400 million in India over the next three years in several areas including computer literacy, localization of its software products, and increasing the size of its software development center.

In September this year, the company announced a number of initiatives to support the Indian government’s efforts to bridge the digital divide in the country. But it did not specify how much it would invest on these programs.