Lured by low wage costs, US giants Microsoft, Intel, Cisco and AMD have announced investments totalling nearly five billion dollars in the high-tech sector of Asia's third largest economy.

"What we've been hearing will happen for many years is now actually happening," Javed Tapia, the India director of Red Hat, a leading US-based technology company, told AFP.

"India has emerged as the new mecca for high-technology investments,"

Microsoft founder Bill Gates announced Wednesday on a visit to India plans to invest 1.7 billion dollars that will create 3,000 new jobs over the next four years. The software giant already employs some 4,000 technology professionals in India.

Earlier last week, Intel said it would invest one billion dollars in India, most of which would be for a new research and development centre in the southern technology hub of Bangalore.

In October, Cisco announced one billion dollars for new Indian start-ups and for leasing and financial solutions to its customers and partners.

Meanwhile, Intel's rival chipmaker AMD plans to sell computers for the same cost as cellphones with an initial investment of five million dollars.

All these investments will provide jobs to an ever-expanding pool of graduates in India, which has a population of over one billion people.

"Technology will be one of the key employers in the future as India offers a wide pool of high skilled engineers which these global companies are looking for. Investments by Microsoft or Intel is recognition of this fact," said Tapia.

The companies are not only seeking to take advantage of the lower wages in India by outsourcing services, but are also greedily eyeing its largely untapped market.

The growing middle class in India is roughly estimated at around 300 million and it is steadily getting wealthier.

India boasts the second fastest growing economy after China with growth this year forecast at between seven and eight percent.

Gates said investment in India would boost Microsoft, the world's leading software maker, which outsources many services to India.

"We depend on India for manpower that is why we are scaling up operations here," Gates said in New Delhi. "We are hiring as fast as we can," he said.

Analysts believe it is India's massive market potential and the availability of low cost talent which makes it attractive to the big investors.

"The strategy of companies like Microsoft is to get access to a wide market by producing and selling low-cost softwares as well as to enhance their research work by using India's talent available at a low price," said Anupama Arora, an analyst at ICRA research.

Indian engineers cost 30 to 40 percent less than their Western counterparts, she said. "This is one of the biggest advantages that favours India."

US chipmakers Intel and AMD have also been quick to seize on India's potential and intend to manufacture a low-cost computer for the country's rural poor.

"We'll grow our local operations, boost venture capital investment and work closely with the government, industry and educators to increase the impact of India's information and communications technology," Intel chief Craig Barrett said.

AMD, jointly with Indian firm HCL Infosystems, plans to boost computer ownership in India from the present 15 million by selling a personal computer for less than 10,000 rupees (220 dollars).

India's computer penetration rate is low mainly because they are still too expensive for the majority of the population. Sales however have jumped about 20 percent in the year to March 2005.

India's software sector is the fastest growing area of the economy over the past decade, posting an annual average growth of around 40 percent.

"These investments by large US corporations have carved a niche for India in the global arena and augurs well for the country's economy," said Vijay Tilakraj, chief dealer at leading domestic brokerage Prabhudas Liladhar.

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