Microsoft moving Development to India

Reuters today reported that software giant, Microsoft, was in the process of moving large numbers of development positions to India in an effort to lower the cost of development and technical support.

Microsoft announced the move on Wednesday and also hinted that it could result in US redundancies.

"With lots of English-speaking talent, we were thinking of a better way to tap into that," S. Somasegar, Microsoft's Vice President of Windows Engineering Services, told Reuters.

Boosting its employee ranks in India also became a priority for the company after its Chairman Bill Gates announced $400 million in Indian investments over three years during a visit to the world's second-most populous nation in November.

So far, Microsoft has about 200 engineers developing software in the south India city of Hyderabad where it opened its first non-U.S. product development center five years ago.

Microsoft, whose Windows operating system and Office desktop software run on more than 90 percent of the world's personal computers, is recruiting people for a customer support center being launched in Bangalore as part of a pilot program.

Initially, Microsoft is hiring 150 people but industry sources said the center could easily be scaled up to at least one thousand people in about two years if the pilot plan is successful.

"To meet the needs of our customers worldwide, we expect to continue to invest in a technical work force in India to assist us with our expanding product development, information technology and customer support functions," a spokeswoman of Microsoft in India said.

The software giant is betting on India's vast pool of low-cost technical workers and engineers who can be hired for roughly one-fifth what their counterparts earn in the United States.

Somasegar said Microsoft could increase the number of software developers in India to as much as 500 by 2005, while it was still evaluating whether to expand its support staff.

That's a key question for U.S. Microsoft employees who work in product and technical support at several U.S. locations.

Last week, Microsoft cut 161 jobs from its consulting services business and on Tuesday, unionized workers warned that Microsoft was planning to cut at least 800 employees from a facility in Texas.

"There may be some impact to U.S. sites, but no decision has been made at this time," said Microsoft spokeswoman Stacy Drake.

India is of strategic importance to the company as the nation's booming $9.5 billion-a-year software services export industry emerges as a key battleground in the tussle between Windows and its rival Linux operating systems.