SAP Bets Big on India; Doubles Customer Base

We were perhaps the first to write about German enterprise software house SAP’s ambitious plans for the Indian market back in the mid-1990s when our ship was still anchored in Bangalore.

So it’s gratifying to note more than a decade later SAP’s significant presence in, and committment to, the Indian market. 

During the current visit of SAP’s entire Executive Board to India, the company said on Tuesday that it had doubled its customers in the country to 2,000 in just one year.

It took nine years for SAP to hit the first thousand customer mark.

Describing SAP’s growth in India as “unprecedented for the company around the globe”, SAP executives reaffirmed a $1 billion investment committment to the country by 2010, a committment originally made in 2006.

At a press conference in New Delhi on Tuesday morning, highlighting the 4,200 SAP employees in the country and rapid growth in the Indian market, SAP CEO Henning Kagermann made clear the importance of the region for the company:

India is strategic for us.

As growth opportunities slow down in the mature American and European markets, SAP is paying more attention to the developing markets, a point hinted at by Kagermann:

Markets like India are at an inflection point when it comes to the adoption of technology by businesses of all shapes and sizes.

The significant chunk of SAP’s investment in India will go towards expanding its SAP Labs development, services and support hub in Bangalore and Gurgaon.

SAP Labs is the largest R&D hub and support operation for the company outside Germany.

SAP’s customers in India include large companies such as NTPC and ITC Paper as well as smaller players like Subhiksha Retail and Masaurhi Petrol Station.

SAP wants to reach its target of 100,000 global customers by 2010 by expanding the addressable opportunity for enterprise software by targeting small and midsize enterprises (SMEs) and focusing on emerging markets such as India and China.

In India, small and mid-sized businesses are the fastest growing segments for SAP.

At the press conference, senior SAP executives declined to provide details on the headcount additions planned for India but Kagermann emphatically denied the company was here because of the lower labor costs.

We are not here in India to recruit people just because they are cheap but because they are high quality….We stay here even if the labor costs go up because we have high quality people.

We fell off our seat laughing at that baloney. Of course, that denial is hogwash. Outsourcing of any kind to India from the West wouldn’t be happening but for the lower labor costs. Everything else is secondary.

Separately, SAP named Indian IT company Wipro as a global service partner focusing on development and installation of enterprise service-oriented architecture products.

Wipro joins TCS in SAP’s exclusive club of global service partners that include big players like Accenture and IBM.

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