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MIDC: A crucial component of Microsoft's India plans
THE FOUR-day visit of Microsoft's Chairman and Chief Software Architect, Bill Gates, has come as a `morale booster' for the Indian IT industry, which has in recent years seen moments of depression and elation, only to be followed by apprehensions over the future growth path.
The much awaited Microsoft investments (in IT sector) in India were finally announced, and these are likely to have a catalytic effect. Of even more significance is the fact that the announcement has reinforced the signals of increasing importance attached to developing countries like India, as crucial geographical centres for outsourcing (software as also BPO and ITES), even as the U.S. IT industry undergoes structural changes to re-adjust and re-align itself with the harsh realities of the post dotcom bust and slowdown period.
The last two years have been a period of re-adjustment that called for better business models in terms of greater efficiency levels, lower and realistic profit margins, and equally realistic valuations of both human resources and technology.
Coming to Microsoft, it is a fact that it has great stakes in India as reflected in its having its development centre at HITEC City in Hyderabad. It views this centre (Microsoft India Development Centre (MIDC)) as a crucial component of its growth chart for development programmes in the next few years, and has accordingly invested $40 million so far (since 1998).
Mr. Gates himself announced in Hyderabad a further investment of $100 million (Rs. 500 crores) over the next three years, which will also see the workforce growing from 159 to 500. How strategically important MIDC is to Microsoft is reflected in Mr. Gates's open declaration that in the long term it will be its biggest development centre outside of Redmond. It now has development centres in Redmond and Israel, besides Hyderabad.
The MIDC, which he visited for the first time, was doing `fantastic and world class work', he observed in a brief interaction with the media. It is playing a critical role in developing products and technologies in three strategic areas for Microsoft — .NET platform, Windows and Enterprise Storage. It was also instrumental in releasing Visual J.net, and Windows Services for Unix. He spent several hours discussing strategies and reviewing the progress made in ongoing projects.
However, Mr. Gates infused an element of suspense saying that "discussions are on now to decide on whether to invest in India in multiple sites or in a single site". Does it mean he is considering Bangalore as another option (in addition to Hyderabad)? Only time will tell. It was in September 1998 that Microsoft announced the opening of its software development centre in Hyderabad, with expectations of shifting to HITEC City, where it took one floor or 50,000 sq. ft., within six months.
Ever since the inauguration of HITEC City Phase I by the Prime Minister, Atal Behari Vajpayee, on November 22, 1998, the State Government has been trying to hardsell a concept of developing the MIDC on a 16 acre site in the second phase, on the lines of the Redmond facility, with lots of greenery and recreation facilities. Obviously, it took Microsoft several years, and a dotcom bust and global slowdown in between, to take a decision to step up investments and make MIDC its biggest development centre (outside the U.S.)!
The situation is not yet clear with Mr. Gates and Srini Koppolu, MIDC Managing Director, maintaining that several options were being evaluated and no locational decisions had been taken. Its emerging relationship on the BPO front with Wipro is another major `feel good factor', reflecting once again India's emergence as an offshore development facility for software as also BPO or ITES. At the same time the `vendor shifting' clause now being included in such deals, giving customers the choice of shifting at will, is a cause for concern and reflects the growing competition within this segment of IT. His announcement that they will go in for more software outsourcing from India through partnerships is an indicator of things to come.
The `Project Shiksha', under which 80,000 school teachers are to be given computer training, as also the programme to set up ten Microsoft IT Academy Centres and collaborate with about 2,000 school labs, have been interpreted as an investment plan of Microsoft with its own long term business interests in view. But then Microsoft is a business house first. The charitable disposition of Mr. Gates is the other side of a personality who started from a garage and made it big in a tough competitive world.
P. Vikram Reddy
in Hyderabad
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