SAP AG plans to invest $1 bn in India by ’10

The German business software major SAP AG said on Tuesday that it will remain invested in Indian even if the labour costs go up. “We are not in India because of the cheap labour but for high quality of workforce. We will remain in India even if the labour cost goes up,” said chairman and CEO, SAP, Henning Kagermann, who is in India to participate in the first-ever executive board meeting of the company in the country. Last year Mr Kagermann was quoted by German edition of the Financial Times as saying that rising labour costs in India were forcing him to start looking to other countries. “India is slowly getting expensive. We have decided to hire a certain number there, and then start looking at other locations’’ Mr Kagermann had said.
In India there are a concerns that as the labour costs go up, companies in US and Europe will start looking towards countries like the Philippines that are offering low cost labour. Mr Kagermann said that SAP is committed to invest $1 billion in India by 2010. A major portion of the investment is targeted at expanding the company’s global development, service and support hub in India, SAP’s Labs. SAP’s Labs two centres in Bangalore and Gurgaon are the company’s second largest reserach and development facilities after Germany. SAP right now has 4,235 employees in India out of which 3,500 are working in SAP Labs.
“I am saying what I had said then (to the newspaper),” said Mr Kagermann on Tuesday. He said that the IT sector (domestic market) in India is estimated to be around $27-32 billion by 2010. “This is a significant reason for us to be present here,” said Mr Kagermann. The company has doubled its customer base to 2,000 in India in one year. “Markets like India are at an inflection point when it comes to the adoption of technology. For instance, it took us nine years to reach the 1,000-customer mark and only one year to double it,’’ said Mr Kagermann. SAP’s sales in India grew by more than 25 per cent in the first half of this year.