IBM Global upbeat on India growth story
SOURCE: The Hindu
DATE: August 15th, 2008
ARTICLE
IBM Global Services has secured deals worth $1.4 billion in a single quarter in India and added two large transformational deals from two domestic steel firms recently. The momentum continues. For IBM, about 66 per cent of its services business comes from non-US markets, where India has become strategic with potential for upside.
The Managing Partner of IBM Global Services, Mr Sandip Patel, in an exclusive interaction with Business Line, explains what has made the difference in India. IBM had over 73,000 employees in India by December 2007. “We are bullish on India and this is among IBM’s most important emerging markets,” he said
The IBM success lies in investments in India made when most players were focusing on serving overseas to cash in on the offshoring trend. The investments include software labs, two research centres, solutions centres and development centres.
The sheer breadth and scale of services, execution capabilities and the ability to combine software, hardware and consultancy, helping enterprises in their total transformation, is a big differentiator, Mr Patel said. Excerpts from the interaction.
IBM has signed over $1.4-billion worth contracts in India in a single quarter. What does the market hold for you?
At IBM India, we are upbeat and hope to grow at a much faster rate than the market. Focusing on the domestic market, we will be able to build on this success, which is turning out to be the fastest expanding business for IBM globally and plays a significant role in its global strategy. Our expanding portfolio of products and services, specifically targeted at the Indian market, will enable IBM to sustain leadership.
Lately, large enterprises are outsourcing their entire IT infrastructure and for business transformation. What is the outlook?
Customers want global know-how and prefer a partner like IBM so they can leverage the length and breadth of technological innovation, skills and financial strength. We are associated with Bharti, Vodafone, Idea and other players in the banking sector such as Canara Bank.
India now hosts telecom centre of excellence. The innovations we have had at these telcos have become reference points for other operators globally.
The company’s clients include Delhi International Airport, DLF Group, FINO, CBDT and two large steel firms yet to be announced. Our investments in Global Services Delivery Centre and Services Innovation Research Centre can be leveraged effectively for domestic business needs. The acquisition of Network Solution has helped address the enterprise and mid-market segments with a range of infrastructure services.
The expertise spans deep into 17 industries in virtually every country and culture worldwide. This enables IBM to help transform, not just business but their thinking. IBM has successfully implemented comprehensive infrastructure and technology for Union Bank of India, making them one of the few banks in India to have the most robust technology infrastructure. Microfinance is recognised as being one of the fastest-growing sectors and FINO’s partnership with IBM will play a big role.
What kind of impact will HP-EDS coming together have on your business?
HP-EDS development is not likely to challenge our leadership position in IT services. We believe HP has bought yesterday’s business model and integrating these services business will be extremely difficult.
Interestingly, while Indian IT services companies continue to look for overseas deals, IBM, Accenture, HP are bagging Indian deals.
A valid reason could be because India is viewed as a rapidly expanding economy. Most of the international companies perceive this as an opportunity to grow their business. But the challenge lies in understanding the market and adopting the right strategy. Apart from being a market leader, IBM has lowered the centre of gravity. We plan to sharpen focus across verticals such as infrastructure, steel, government, retail, airports, airlines and financial services. The Indian domestic IT market has witnessed huge transformational deals lately as opposed to stand-alone services in a piece-meal fashion from multiple vendors. By wanting to deploy in-house solutions, many companies end up with a large IT workforce.
What is the impact of slowdown on tech spending?
Globally, IBM had an outstanding quarter and a strong first half in 2008 even when many of our competitors were facing turbulent times. Our diversification strategy is working and insulates us against turbulence in the US and Europe. Today, about two-thirds of our revenue comes from outside the US.
A recent Gartner report says TCS, Infosys, Wipro will become next-generation mega vendors.
Competition will grow and these companies will scale up significantly. What separates us from the rest is the ability to combine software, hardware and consultancy and offering them solutions.
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