SAP will more than double the number of staff at its software development centres in India and China by 2006, and is considering setting up a new centre in Eastern Europe.
"Our main driver is not to save cost but to have huge hubs where the growing markets are," said Peter Zencke, SAP executive board member. He added that there were local market requirements that SAP needed to understand.
In line with this reasoning, SAP will not reduce the number of people it employs in R&D in Germany, according to Zencke. "The biggest installed base we have, and still a stable growth market, is in German-speaking countries," he said.
But the company's R&D operation in Germany, with a staff of about 5,000, will not grow as much in terms of head count as the operation in India or in China. Zencke said growth in R&D staff in Germany over the next year would be around 2%.
SAP Labs India, the company's development centre in Bangalore, develops both technology and applications. It is SAP's largest development facility outside Germany. SAP, which currently employs 1,300 staff at the lab, plans to take the total number of staff to 3,000 by 2006. The Bangalore lab was involved in the development of NetWeaver, the company's integration and application platform, and also works on mobile technologies.
SAP Labs China in Shanghai currently employs nearly 200 staff who work on software localisation, particularly in the double-byte enabling of SAP software for the Chinese, Japanese, Korean and Taiwanese markets. SAP plans to increase the number of staff at this lab to about 400 by 2006.
"The supply of well-educated, highly intelligent IT engineers is much better in India than in China," said Zencke. He added that another reason SAP was not doing as much development work in China as in India was the company's apprehension about inadequate protection in China for intellectual property rights.
SAP also has a development centre in Bulgaria, an offshoot of an acquisition of a local company, which focuses on Java technology infrastructure.
Besides the development operations, SAP has services operations in India and in China. This year it has set up a services operation in Dalian, China. "In China there is the perception that services should come for free," said Zencke. "The ability to offer these services at a cost level that was fitting to the local market was very important to us." SAP uses remote delivery of services and remote diagnostics to drive down service costs.
John Ribeiro writes for IDG News Service