The build-out of IBM's global operations continued Tuesday as the company announced the opening of new software development centers in Pune, India, and Beijing, China.
The centers will each be staffed by 500 developers focused on creating so-called service-oriented architectures for customers around the world, including those located in the United States. SOAs feature standards-based software components that allow customers to easily connect and re-use various business applications and services. IBM says it expects the market for SOA-based services to reach $160 billion by 2008. The company did not disclose the level of financial investment it's making in the Pune and Beijing facilities.
The Pune center will focus on building SOA systems for the insurance and healthcare industries. The Beijing facility will create systems for the banking and state and local government markets. Software architectures that will power the child welfare systems for four U.S. states will be created from Beijing, says Jeby Cherian, head of IBM's global solutions delivery for India. Cherian declined to identify the states.
The announcement marks the latest step in IBM's plan to centralize business software development activities in low-cost regions that are stocked with an abundance of IT talent. Earlier this year, the company opened a major new facility in the Indian tech hub of Bangalore, from which IBM employees are designing business technology architectures and related software for customers worldwide.
Cherian says the Pune and Beijing facilities will act as satellites of the Bangalore center. "They will be fully integrated," Cherian says. He adds that the Beijing center also will allow IBM to more easily serve its large customer base in Japan.
IBM's operations in China are small compared to its vast and rapidly growing Indian presence. It currently maintains a services staff of 7,000 in the People's Republic. By contrast, the company employs more than 40,000 workers on the sub-continent. But IBM has big plans for China that could result in a dramatic increase in the size of its Chinese workforce. "Our strategy is about both India and China and we'll continue to make strategic investments in both countries" Cherian says. "The scale of the operations in each will be determined by customer demand."
On Monday, IBM said it would partner with U.S. investment bank Lehman Brothers to launch a $180 million fund that will invest in midstage and mature Chinese businesses.