IBM Chairman and CEO Announces Plans to Triple Investment in India over Next Three Years.

BANGALORE, India -- The chairman and chief executive officer of IBM, Samuel J. Palmisano, speaking to the largest-ever gathering of IBM employees in India, today announced IBM expects to nearly triple its investment in India over the next three years.

Mr. Palmisano spoke before 10,000 employees gathered in Bangalore and via satellite to thousands of other employees in Delhi, Mumbai, Kolkata and Pune. With more than 43,000 employees in 14 cities, India is IBM's largest country organization outside the U.S.

Present at the Bangalore meeting was Dr. A.P.J. Abdul Kalam, the president of India.

"India and other emerging economies are an increasingly important part of IBM's global success," Mr. Palmisano said. "If you are not here in India, making the right investments and finding and developing the best employees and business partners, then you won't be able to combine the skills and expertise here with skills and expertise from around the world, in ways that can help our clients be successful. I'm here today to say that IBM is not going to miss this opportunity. In the next three years, we will triple our investment in India -- from $2 billion over the last three years to nearly $6 billion in the next three years. That investment will ensure that we make the most of the opportunities to grow this marketplace, while it also enables IBM to fulfill its vision to become a globally integrated company."

Also in attendance during Mr. Palmisano's meeting with IBM India employees were Wall Street analysts, who were attending IBM's first-ever financial analyst meeting in India, Karnataka Governor T.N. Chaturvedi and Karnataka Chief Minister H.D. Kumaraswamy.

As immediate steps in its increased investment in India, IBM is:

--Establishing the first in a new breed of Service Delivery Centers in Bangalore, deploying new processes and technology that will greatly automate IT service delivery to provide clients with enhanced flexibility and increased worldwide access to skills, service offerings and continuous availability at lower cost.

--Creating the IBM Systems & Technology Group (STG) Innovation, Development and Executive Briefing Center in Bangalore, focused on IBM infrastructure solutions, technologies and innovations and providing performance benchmarking, testing, data migration and competency building capabilities.

--Locating a Telecommunications Research & Innovation Center at its India Research Lab that will serve as a key resource to IBM's telecommunications clients around the world.

--Increasing the capabilities and staff of the High Performance On Demand Solutions Lab in Bangalore, a specialized software and services lab driving automation and virtualization of complex IT infrastructures.

--Inaugurating "The Great Mind Challenge," which is designed to improve the software development skills of Indian students as they work to solve issues facing businesses today.

Advanced Global Services Delivery Network

IBM has formed a new Global Delivery Research and Development organization that pairs researchers from its eight worldwide labs with services delivery experts to reinvent service delivery for IT by creating a virtual global delivery platform unifying IBM's entire network of IT delivery centers. Standard processes and greatly increased automation distribute work seamlessly among the global centers, providing unprecedented levels of reliability for clients via automatic back-up capability. In addition, the automation of service delivery will allow IBM to scale without adding new resources, dramatically lowering costs by reducing the dependence on labor for low-level tasks, such as remote systems monitoring.

This work is being piloted at IBM's Global Service Delivery Center in Bangalore, which runs, not just monitors, IT operations from India for more than 225 clients worldwide, providing high-value complex services, including security and network operations, server and storage management, and hosting.

The new technologies being deployed in India will be rolled out to IBM services centers worldwide in Boulder, Colorado, U.S.; Bratislava, Slovakia; Brno, Czech Republic; Buenos Aires, Argentina; Dublin, Ireland; Hortolandia, Brazil; Johannesburg, South Africa; Shenzhen, People's Republic of China; and Szekesfehervar, Hungary.

This network of Global Delivery Centers is a key component in IBM's strategy to apply innovation to continually enhance its services delivery model that goes beyond simply lower costs to provide clients with high-value business solutions.

IBM STG Innovation, Development and Executive Briefing Center

The IBM STG Innovation, Development and Executive Briefing Center will provide a one-stop shop for clients to learn about IBM infrastructure solutions and technologies, as well as perform benchmarks for IBM System and Storage products, including proof-of-concept, scaling and performance as well as data migration. The new center will work closely with the STG Development Lab, which is located in the same building.

The center also will focus on Linux competency as IBM increases its focus on Linux in India. Earlier this year, IBM announced greater collaboration with the open source community to improve the development of general Linux kernel functionality. India already has IBM's third largest population of Linux developers. The new center will work closely with the Linux Technology Center, which has been operating in Bangalore since 1999.

The IBM STG Innovation, Development and Executive Briefing Center also will coordinate the development of skills and competencies in IBM hardware and software solutions for IBM Business Partners and ISVs as it provides support leading to additional sales.

Telecommunications Research & Innovation Center

The Telecommunications Research & Innovation Center at the India Research Lab in Delhi, one of the eight IBM research labs around the world, is the latest in a series of industry-specific initiatives designed to tap relevant IBM Research technologies and expertise for collaborative projects with clients and business partners.

The center will focus on such areas as advanced analytics to identify useful information from telecom call center records, network management technologies for improved transaction process monitoring and technologies to allow telecom companies to offer location-based services to their customers.

Located in labs where concentrations of technologies and expertise reside, the local Research team actually serves as both a global resource for a specific industry as well as a conduit for clients and partners into IBM Research at large. With more than 3,000 scientists, IBM Research helps businesses, governments and other organizations differentiate themselves in their respective fields through innovation.

High Performance On Demand Solutions Lab

The High Performance On Demand Solutions Lab (HiPODs), the first-of-its-kind lab in India, connects IBM's top consultants, developers, engineers and researchers in India and around the world, culminating the most comprehensive skills and resources available in the industry today. IBM will further enhance its ability to leverage the best of Indian talent and IBM's global innovation leadership by increasing staffing of the lab.

Customers bring their applications to this dynamic infrastructure lab to validate their performance, scalability and solutions needs before deploying them in a business environment. The specialists at the HiPODS team then work with the customers to tune their application to facilitate optimal performance. The lab was inaugurated in February 2006 and already has worked with more than 40 customers to transform and support their business critical activities.

The lab and other IBM HiPODS Labs located in various regions of the world are responsible for facilitating billions of transactions every day from the company's many high-volume customer engagements.

The Great Mind Challenge

As part of its Academic Initiative in India, IBM, along with IBM Business Partners, will launch "The Great Mind Challenge," in which students at the country's engineering schools will develop software based on various project scenarios. Mentors from IBM will work with the students, and there will be a series of training sessions as students learn how to collaborate to solve business problems. The top 20 projects will be put on the Internet to be used without charge by end users and IBM Business Partners. The program will begin June 15 and continue through the end of this year.

This Challenge is an outgrowth of IBM's efforts to collaborate with local governments and university students to create a repository of innovative solutions that are available free to government agencies, solution providers and academia.

Project INVITE (Initiative to Nurture a Vibrant Information Technology Ecosystem), another offering through IBM's Academic Initiative, already has created more than 25 e-governance solutions and projects developed on open source software and open standard technologies. More than 3,400 students across 155 institutions across India have participated in Project INVITE since it began in June 2005. By involving university students, the initiative seeks to help universities keep their IT curricula current and responsive to the needs of the Indian job market.