Microsoft plans for expansion in India

Microsoft Corp. is planning a number of moves that will increase and potentially consolidate its development activities in India, according to company officials and sources.

Microsoft, based in Redmond, Was., is increasing the number of staff at its software development centre in Hyderabad in the South India state of Andhra Pradesh from 200 to about 500 employees by 2005, according to a company spokeswoman.

This year the company is also increasing the headcount at another centre in Hyderabad that handles application development for Microsoft’s in-house IT requirements. This centre currently employs about 125 staff. Details of the number of staff being added this year were not available from Microsoft, though it is likely to be another 125, according to informed sources.

“We are taking both these operations and combining them at a single facility at Manikonda near Hyderabad,” said the spokeswoman, who declined to be named.

Microsoft announced last year that it had entered into a Memorandum of Understanding with the government of the state of Andhra Pradesh to acquire 42.5 acres of land for a facility in Manikonda. Construction of the facility is scheduled to be completed by the end of this year. The company currently uses leased facilities. The news that Microsoft is moving into its own large facility in Hyderabad sparked protest from the Seattle-based Washington Alliance of Technology Workers (WashTech).

“Microsoft expanding in India means that workers in Redmond will face direct competition from workers that make a fraction of their wages,” said Marcus Courtney, president of WashTech. “This will only lower wages and benefits for Microsoft U.S.-based employees. The work that Microsoft is getting done in R&D in India can be done in this country.”

Microsoft, however, counters that Redmond will continue to be its development hub. “Ours is a centralized development model, and we don’t see the staff in India growing into thousands,” the spokeswoman said. “We invested in a parcel of land that will allow us options and flexibility for future growth,” said the spokeswoman. “While we do not yet understand how large our presence will be in the future, it made good business sense to buy this parcel now should we need it in the future.”

Taking a cue from a number of multinational tech companies, Microsoft has also set up a support centre in Bangalore. Called the Global Technology Support Center, the operation offers voice and e-mail based tech support to Microsoft customers worldwide.

“We have this strategy to follow the sun to offer round-the-clock support, and hence a support centre in India made sense,” the spokeswoman said. The centre currently employs about 250 staff, and Microsoft does not have any immediate plans to increase the number of staff at the centre, the spokeswoman said.

Microsoft also outsources software development and some tech support and call centre work to Indian companies. Microsoft’s own operations and partners together account for about 900 to 1,000 staffers, the spokeswoman said. But the numbers at contractors’ facilities could be far more than the company reports, and run into thousands, according to Courtney. Outsourcing companies doing work for Microsoft are tied in by nondisclosure agreements.

Microsoft’s Hyderabad software development centre, which opened in 1998, has created a number of technologies and products, including Services for Unix, which enables customers to integrate Windows into their Unix environments, and Visual J#.NET, a Java language development environment for targeting the .Net platform.

The centre announced last year that it is expanding its product development portfolio, and as a step in this direction has created a Windows Server Technologies Group. The development centre is also setting up a Networking Competency Center to work on various networking projects. A Developer Division Group focuses on developer tools, while an Enterprise Storage Group works on tools and technologies in the area of storage. The Mail Group, which handles connectors from Outlook, is also at the centre.

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