The offshore market for outsourcing applications development got another boost this week, with SAP, IBM and Siemens all increasing their commitment to the model. SAP boosted the number of its overseas research and development centres to eight, after opening new facilities in Shanghai in China, and Bangalore in India. SAP Labs China, which employs 120 software engineers, will support the ongoing development of the company’s enterprise management product lines and will handle local customers’ development requirements. The existing centre, which has been operational for seven years, focused purely on localising offerings for the Chinese market.

The new one, however, will receive annual funds of about $11.8 million and develop applications for European and US customers. It will also take on “strategic development projects” that are assigned to it by SAP’s board of directors. In addition, the enterprise package vendor said it intends to invest about $120 million to create new facilities in India, with the aim of tripling the workload there within three years. The new centre is the company’s largest in the Asia-Pacific region and will employ 1,100 staff by 2006. Meanwhile, according to reports, IBM has told managers it plans to move 4,730 US programming jobs to India, China and elsewhere, replacing staff at facilities such as Southbury in Conneticut, Poughkeepsie in New York, Raleigh in North Carolina, Dallas in Texas and Boulder in Colorado. The company is already believed to have hired 500 software engineers in India and is expected to notify about 947 employees of the situation in the first half of next year. But some will be informed by the end of January and will be expected to train their overseas replacements in the US for several weeks.

Those earmarked for replacement will have 60 days to find another job inside the company despite the fact that IBM currently has a hiring freeze in place. It is currently unclear, however, whether the rest of the jobs will also go later in the year or in subsequent years. IBM has dubbed its scheme “Global Sourcing” and first presented it internally to various mid-level managers in October. It will affect personnel handling software upgrades in the vendor’s Application Management Services group, which is part of IBM Global Services. Finally, Siemens announced that it intends to move one third of its software development operations to Central and Eastern Europe, Russia, India and China, although only a few thousand of the company’s 30,000 programmers currently work in these areas. The aim of all of these vendors is to cut costs.