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SAP to invest $120 million in India

The software company plans to make a multimillion-dollar investment in growing its business in India, according to a magazine report, amid an increase in high-tech interest in Asia.

SAP reportedly plans to spend $120 million over the next three years on growing its business in India, a move that puts it among an increasing number of high-tech companies building up operations in Asia.

The Walldorf, Germany-based software company plans to direct the funds primarily toward marketing and sales initiatives, with the intention of tripling business in India over the next three years, according to a report this week in Indian business magazine The Financial Express. The report extensively quotes Alan Sedghi, the president and managing director of SAP's Indian subsidiary.

An SAP representative in the United States was unable to immediately confirm the report, but said India is an important market for the company. SAP reported sales of $16.2 million in the country last year, a relatively small portion of its total revenue of more than $7 billion.

The software provider is among a growing number of high-tech companies that are expanding their marketing and development efforts in India and other Asian countries. Rivals Oracle and JD Edwards have each announced plans in the past year to increase their software engineering staff in India. In addition, Hewlett-Packard, IBM and Electronic Data Systems have increased their presence there in a move to cut costs by tapping the country's cheap, well-educated information technology work force.

SAP, which officially set up shop in India in 1996, also has a software development center there that employs more than 500 people. Opened in 1998, it's one of six such centers around the world. The company plans to increase its Indian development staff by several hundred this year and is in the process of moving to a 15-acre campus that can house up to 1,000, according to SAP's Web site.

The software provider's investment in its Indian sales staff indicates that high-tech companies see the country as an opportunity to generate revenue as well as cut development costs. When Oracle unveiled plans last year to hire 2,000 engineers in Bangalore and Hyderabad, India, an Oracle executive said the company sold more call center software in India than in the rest of Asia-Pacific combined. Many American firms have outsourced call center operations to Indian companies in a similar effort to cut costs, so it's logical that India is a growing market for such software. SAP and Oracle both compete in the call center software market.

In a push to increase sales in India, SAP plans to double the size of its sales and support staff in the country from 100 to 200 people and open new offices there, according to The Financial Express report. SAP, which sells business management applications for accounting, manufacturing and other corporate functions, is also considering acquiring technology companies in India, the report said.

The shift in high-tech jobs and investments to Asia is a major development shaping the IT industry. A November report from Forrester Research estimated that the number of computer jobs moving overseas from the United States will grow from about 27,000 in 2000 to a cumulative total of more than 472,000 by 2015. By that year, a total of 3.3 million U.S. jobs and $136 billion in wages will transfer offshore to countries such as India, Russia, China and the Philippines, according to Forrester.

Reasons for the shift start with lower wages. HP pegs the cost of a talented programmer in India at about $20,000 a year, a fraction of the cost of a top U.S. tech worker.