(FORTUNE Magazine) – For a fellow with a net worth of $42 billion, Bill Gates stays awfully hungry. Every year he makes a point of visiting China at least once. He makes grueling, whistle-stop tours, like the one in India in March to talk to customers, government officials, and employees. Why? "That's where we'll get a lot of our growth in the coming years," he replies. "These countries are only just getting started buying PCs in big numbers. And because they usually don't have lots of legacy systems already in place--you know, mainframes and minicomputers--we have a chance to have an even bigger share of the overall computer business than we do in the U.S. or Europe or Japan. You bet I think it's important."

As infotech booms around the world, companies like Microsoft can't help but take note. During the past fiscal year, which ended in June, more than half of the company's $11.4 billion or so in total software sales came from its overseas operation. Most of that derives from Europe and Japan. But the developing economies of Latin America, Eastern Europe, Africa, and Asia--countries that heretofore have been both technological backwaters and hotbeds of software piracy--now account for nearly 10% of Microsoft's overseas sales and are by far the company's fastest-expanding markets.

To best tap these markets, Gates has mapped out a blueprint for making Microsoft a globetrotting multinational. The Microsoft approach, like its software, is fast, lean, and smart. Gates hires mostly local managers to run operations. Microsoft's sales offices and wholly owned subsidiaries are spread throughout nearly 60 countries and are staffed by 6,200 employees, among whom--believe it or not--only five are expats.

These managers, knowledgeable about their home markets, create partnerships with small companies that peddle Microsoft products like Windows, Microsoft Office, and Windows NT. This allows Gates to keep his foreign staff small. Each overseas employee generates more than $1 million of revenue. (For the entire 22,000-person company, the figure is about $500,000 per employee.)

In fact, Microsoft's go-go globalism in many ways resembles a pyramid scheme, much like the symbiotic, multilevel marketing and direct-sales structures employed by Avon or Mary Kay Cosmetics. Its small local "partner" companies do most of the grunt work of actually flogging software and supporting customers. These partners in turn train other partners, and the sales network grows.

More than simply attempting to build its own aggressive overseas sales force, Microsoft's real goal is to foster miniature local software industries to exploit nascent markets on the company's behalf. For instance, Microsoft helps bankroll independent software distributors, which are openly encouraged to handle competitors' products as well. And it prods still other local companies to write their own commercial software programs that, of course, complement its flagship Windows operating systems but also often compete directly with Microsoft's word processors, spreadsheets, and other applications. The most extreme example is China, where Microsoft's staff of 70 works with hundreds of budding software companies and a legion of 15,000 certified resellers (not people but companies), whose ranks could easily double in the coming year.

There are a couple of big reasons Microsoft is able to do so much overseas with so little. First, because software products are so easy to manufacture and a snap to ship, Gates doesn't have to worry about building and operating factories. Instead Microsoft, as it does in the U.S., contracts out to others to duplicate and package much of its software. Just as important, PCs are so cheap and easy to set up, unlike mainframes and minicomputers, that businesses and governments in even the poorest and most backward nations can afford them. In fact they are the perfect technology to enable small-scale--or even rustic--enterprises to break into the Information Age.

Of course, there are big impediments too. Microsoft must adapt its products to support dozens of different languages and writing schemes, but that's another task it is increasingly farming out to local contractors. Distribution systems are a joke in many developing regions, as are transportation and telecommunications infrastructures. Also, software, like computers, faces stiff tariffs in many developing countries--until recently, for example, India imposed 112% duties on imported high-tech goods, though it's moving to eliminate them.

But by far the biggest bugaboo is piracy. In Eastern Europe, China, and much of the rest of Asia, more than 90% of the copies of software in use are ripped-off versions. In some countries the government is the worst offender. Even in Western Europe the figure tops 50% in many markets. According to Orlando Ayala, the dapper 40-year-old Colombian who manages Microsoft's efforts in Latin America, Southeast Asia, the South Pacific, India, Africa, and the Middle East, the market value of illicit software worldwide runs in the tens of billions of dollars each year. Says he: "I drool more than I cry about it, though, because if we can take back even a fraction of those lost sales, it's pure upside."

One of the best places to observe how Microsoft's global formula all fits together is in India, a country where Gates was feted like royalty when he visited earlier this year. On the Microsoft org chart, India is part of what is called the "intercontinental region," that enormous territory supervised by Ayala. It's a diverse cultural quilt that reflects the entire spectrum of economic development, from industrialized countries like Australia and South Africa, to stirring giants like Brazil, Mexico, and Indonesia, to outposts in Africa that have one-person sales offices.

While India, with its billion-plus population, is by far the biggest country in the territory, it contributed only about $30 million, or 4% of the intercontinental region's $740 million in sales, this fiscal year. Despite its mind-boggling poverty, Gates and Ayala still think India is one of the most promising emerging markets on the globe because it also harbors a thriving middle class of more than 50 million people, many of whom are well educated and speak and read English. The country also can boast some of the best computer programmers on the planet.

When Microsoft first opened an office in Bombay in 1990, it didn't parachute in an expat to get things started. ("That's key," says Gates. "It sends the wrong message to have a foreigner come in to run things.") Instead it hired Rajiv Nair, a gregarious, 34-year-old U.S.-educated Indian who worked for computer maker Unisys.

Nair's initial goal was rather modest--to make sure that the hundreds of thousands of PCs made in India each year were loaded with legitimate copies of Microsoft's operating systems and applications. In those early days virtually every Indian computer maker bundled pirated software not only because it was easy to copy but because import duties made the real thing prohibitively expensive. Recalls Nair: "Back then a basic PC with a monochrome monitor cost $7,000. Nobody wanted to pay for the software too."

It was slow going those first few years--not until 1993 did Microsoft surpass $1 million in annual sales, even though Indians had embraced PCs with a vengeance. Besides lobbying the government to reduce tariffs and enforce anti-counterfeiting laws, and cajoling PC makers to come clean, Nair also had to build a distribution channel from scratch. He and a handful of associates traveled from city to city trying to find small businesses willing to risk becoming distributors of products that retailers didn't want to carry and that customers didn't want to pay for. At first there were few takers.

But Nair stuck with it. By 1995 annual sales still were only about $7 million but were more than doubling every year. More important, the government had finally begun phasing out tariffs on high-tech imports, which would dramatically lower software prices. That combination of news caught the attention of Steve Ballmer, Microsoft's executive vice president for sales and marketing. Intrigued, Ballmer, who is also Gates' right-hand man, went to India in 1995 for a whirlwind weeklong look-see. His conclusion: India was potentially a huge opportunity, and time was a-wasting. Shortly after he got back to headquarters in Redmond, Wash., he authorized turning the Indian operation into a full-blown subsidiary. He also convinced Sanjay Parthasarathy, 32, one of Microsoft's most respected computer scientists at headquarters, to go back to his homeland to become the director of a newly created region that includes India, Nepal, Bhutan, and Sri Lanka.

By the end of this year Parthasarathy and Nair, who is now the general manager of the subsidiary, will have quadrupled the size of the Indian staff to 100, opened liaison offices in five cities, and set up reseller training centers that have certified 1,500 new resellers. Many of those resellers in turn were also certified to train still others. By the end of 1997, Nair's goal is to have 10,000 certified resellers, all capable of advising various kinds of enterprises and institutions on how to use Microsoft software to automate their businesses.

Meanwhile, the company also set up a special office in Bangalore--a city that many call India's Silicon Valley--to help local software developers build more Windows-compatible programs. For instance, after Gates learned during his recent visit that India is a land of more than a dozen different languages, he asked Nair and Parthasarathy to contract with local software developers to quickly adapt Windows to as many of them as possible. (Gates is also contemplating establishing a software research and development center in Bangalore to tap into the rich vein of Indian programming talent.)

All this effort is paying off handsomely. The piracy rate in India is down to 75% from 90% two years ago, and needless to say, sales are accelerating. That's not good enough for Parthasarathy, who is as intense as Nair is cheerful. (They make a great good-cop/bad-cop team.) Says he: "I think we were a couple of years late really getting going here, but on the other hand, I don't think anybody else recognized India's enormous potential either. It's too easy to overlook that there are as many people in India's middle and upper classes as there are in most European countries. I'd be extremely disappointed if we didn't surpass $100 million in sales by the end of the decade."

That's not chump change, and the same scenario is playing out in Brazil, Russia, Indonesia, and, of course, China. Ayala thinks his region alone--which doesn't include either Russia or China--will ring up more than $3 billion in sales by 2000. Okay, but before Microsoft gets there, it faces a big challenge.

Some observers wonder whether Microsoft is delegating too much responsibility to its partner companies around the globe, many of which are tiny three- or five-person outfits getting into business for the first time. The worry is: Does this approach remove Microsoft too far from its ultimate customers? Gates and Ayala contend that the same model has worked for years in the U.S., Japan, and Europe, so why shouldn't it in developing countries too? Says Ayala: "The idea is simple: If you spread the wealth among your partners, they will be just as entrepreneurial as we would be. Besides, when you have a lot of partners, if one isn't doing a good job, it will get squeezed out by one that does."

In the larger developing countries, Microsoft helps its partners professionalize their operations by offering management and sales training. Also, in China and Eastern Europe the company offers exchange programs in which it invites promising people from key resellers and software developers to come to work for Microsoft for a year or so to pick up more worldly ways.

Microsoft has one more not-so-secret weapon going for it that nobody else has: namely Bill Gates. He may be an icon in the U.S., but in the developing world he's the apotheosis of success, the ultimate entrepreneurial role model, who gives Microsoft a cachet no other company can boast. When he visited India last March, literally thousands of businessmen dropped everything to go hear him speak and find out what opportunities he saw for India.

"I've never seen anything like it," said an exhausted Nair as he sipped a Scotch during the final banquet of Gates' pilgrimage. "He may be the richest man in the world, but you can't begin to put a value on what he means to our business."

Try $42 billion and counting.