A vital cog in global plans – IBM


India becomes a vital cog in IBM’s global plans. The world’s biggest computer services company could not have chosen a more appropriate setting to lay out its strategy for staying on top.

The chairman and CEO of IBM, Samuel Palmisano, will address 10,000 Indian employees. The meetings are more than an exercise in public and investor relations. They are an acknowledgment of India’s critical role in IBM’s strategy, providing it with its fastest growing market and a crucial base for delivering services to much of the world.

He will share the stage with President APJ Abdul Kalam and chairman of the country’s largest cellular services provider, Bharti Tele-Ventures, Sunil Mittal to make some of the most important plans of their company for India.

An additional 6,500 employees will look in on the town hall-style meeting by satellite from other Indian cities. On the same day, Palmisano and other top executives will meet with investment analysts and local customers to showcase IBM’s global integration capabilities in a briefing customarily held in New York. During the week, the company will lead the 50 analysts on a tour of its Indian operations.

A significant part of any large project that we do worldwide is today being delivered out of here, said IBM’s MD for India, who presides over what is now its second-largest worldwide operation of IBM.

In the last few years, even as the company has laid off thousands of workers in the US and Europe, the growth in India work force has been remarkable. From 9,000employees in early 2004, the number has grown to 43,000 (out of 329,000 worldwide), making IBM the country’s largest multinational employer.

Some of the growth has been through acquisition. In a deal valued at about $160 million in 2004, IBM bought Dakshe Services, India’s third-largest back-office outsourcing firm with 6,000workers. Since then, that operation alone has grown to 20,000employees.

Now that companies like Infosys and Cognizant have clearly demonstrated that the services marketplace is not impregnable, the new battle is for talent, said the president and CEO of Cognizant Technology Solutions. IBM is growing not only in size by adding new hires, but also in revenue. The company’s business in India grew 61% in the first quarter this year, 55% in 2005 and 45% the year before.

That growth has not come just from taking advantages of the country’s pool of low-cost talent. In recent months, the technology hub of Bangalore in India has become the centre of IBM’s efforts to combine high value, cutting-edge services with its low-cost model.

It started recently a global business solutions center, announcing that it would represent the future of future of consulting services. IBM expects to invest more than $200 million a year in the new center. It hopes to provide clients with access to the expertise of its 60,000 consultants worldwide in complex areas like supply chain management and compliance with banking rules.

But competitors are trying to gain on IBM. The rival consulting firm, Accenture, based in Hamilton, Bermuda, is ramping up equally rapidly in India.

The conclusion that can be made with all the aforesaid hectic company parleys and the importance given to their Indian business show how important India is for Global companies to grow faster and expand directly as well as through acquisitions and mergers. That is the reason we have presented some practical aspects of the scenario.