Dell will push deeper into low-cost countries by hiring another 1,200 staff for a call center in India and building a factory in eastern Europe, the PC maker said Monday.
As expected, the company's third Indian call center opened on Monday. Michael Dell, Dell's chairman, opened the site, which is in the northern state of Punjab. Dell said he expects the new center to have about 1,500 workers in a year, compared with just 300 now.
The company employs more than 7,000 people in India, its largest work force outside the United States.
"I think India will also represent a great market for us. The business is expanding at a very rapid rate," Dell told employees in the industrial township of Mohali. "Certainly the scale of India is pretty awe-inspiring."
Dell has one call center in the southern city of Hyderabad and another in India's technology capital, Bangalore, to handle customer care, offer technical support and for application development.
India's flourishing business process outsourcing (BPO) sector has become a magnet for global companies such as General Electric and American Express. The sector is expected to show sales of $5.7 billion in the fiscal year to March 31, a growth of 44 percent over the previous fiscal year.
Heavy demand for outsourcing of services such as payroll processing and insurance claims has helped the industry grow at a compounded annual rate of 56 percent since 2000.
Analysts say companies like Dell save 40 percent to 50 percent on costs by outsourcing work to India, which has one of the world's largest English speaking IT pools. Close to 120,000 trained IT professionals and 3 million other graduates are added each year to the work force.
The BPO industry expects to add 94,500 jobs in this business year and is forecast to exceed 1 million people by 2007-08.
Although Dell did not mention the exact investment plans for India, he said the computer giant has invested "tens of millions of dollars" in the country.
"Asia is a rapidly growing part of the world for us. We are also growing in Europe and the U.S.," Dell told reporters.
He added the company would be setting up a second European computer making plant "somewhere in the eastern part of Europe," but declined to give the exact location.
Dell makes computers in six locations and has thrived by adopting a strategy of manufacturing computers in the regions where they are sold, unlike most other PC makers, which rely on Asia, and China in particular, to manufacture their products.
The plan to set up another plant in Europe seems in part designed to shore up its business against Hewlett-Packard in one of the few big markets where it outpaces Dell in sales. Dell also lags Hewlett-Packard in PC sales in Germany, China and India.
Domestic manufacturer HCL Infosystems and IBM are also ahead of Dell in India. While both IBM and Hewlett-Packard buttemble computers there, Dell imports them, making its products more expensive as they attract customs duty.
India's fast-maturing PC market surged 34 percent last year, and analysts expect the market of 4 million units a year to more than double in the next three years as falling rates, proposed cuts in duties and increased compebreastion fuel demand in Asia's fourth-largest economy.
In its budget for the fiscal year to March 2006, the government said it plans to scrap a 10 percent import duty on computers starting April 1.
Dell said he expects his company's growth in earnings per share in 2005 to exceed growth in sales and sees the company growing faster than the industry.
"Our EPS will grow faster than revenue. We see a mulbreastude of growth opportunities for Dell, including new products, services, new geographies," he said. "We expect to continue to grow faster than industry. Our growth is coming from enterprise customers, servers and storage devices."
In January, Dell said he expected growth in the personal computer market to be around 10 percent.
For Dell's fiscal first quarter ending in April, the company said last month that it expects a profit of 37 cents a share and sales growth of around 16 percent to $13.4 billion, while analysts predict 36 cents a share on revenue of $13.5 billion.
