Source: BusinessWeek
When IBM (IBM ) pulled out of India in 1978 in protest of new government regulations, it opened up the nascent Indian tech market to local players. Some of them grew up to be the tigers of the country's fast-growing software and tech services industries, including Infosys (INFY ), Wipro (WIT ), Tata Consultancy Services, and HCL Technologies. Now, those outfits are some of IBM's toughest competitors.
The company boosted its Indian staff from 9,000 at the end of 2003 to 23,000 at the end of last year, and, according to an internal planning document made public by a union, the total is on its way to 38,000 by the end of this year. The company says the 38,000 forecast is too high but acknowledges it will grow fast.
Already, IBM India just blew by Japan as the company's second largest country operation -- after the U.S. "What you have seen in the past 5 years is nothing compared to what you'll see in the next 5 to 10," promises Mats Agervi, a tall, enthusiastic Swede who is vice-president for global delivery at IBM Global Services India.
IBM is under pressure to lower the costs of service delivery. Until the Indian software services companies emerged as serious rivals two years ago, its huge services workforce was distributed primarily within the regions where the work was done. One result was that its compensation costs -- and therefore prices -- were high. With the tech bust and the rise of the Indians, that strategy no longer worked. So IBM is in the middle of a massive retooling and migration of its workforce. It recently fired 14,000 services employees in Western Europe, the U.S., and Japan -- even while it's hiring in India and Eastern Europe. BM isn't the only company expanding rapidly in India. Accenture (ACN ) has about 14,000 employees there, and Hewlett Packard (HPQ ) has 10,000, according to Technology Business Research Inc.
The most notable point is "The Indian competitors are expanding their own workforces in India -- and setting up programming and call centers elsewhere, as well. So far, though, "they're not in the same league. They don't have consulting, and they're not as global as IBM and Accenture". Infosys has come with a similar setup recently.
The deeper IBM goes into India, the less it will seem like an outsider and the more it will become part of the local landscape. At the same time, India will be an important stop on the global talent supply chain.
"In the future you'll have two kinds of operations. You'll have innovation factories scattered around the world, and you'll have people within countries who can deliver to clients the value created in the factories," says Agervi, IBM's global delivery vice-president. Ultimately, if IBM gets this right, IBM India will produce a lot of both.
The company boosted its Indian staff from 9,000 at the end of 2003 to 23,000 at the end of last year, and, according to an internal planning document made public by a union, the total is on its way to 38,000 by the end of this year. The company says the 38,000 forecast is too high but acknowledges it will grow fast.
Already, IBM India just blew by Japan as the company's second largest country operation -- after the U.S. "What you have seen in the past 5 years is nothing compared to what you'll see in the next 5 to 10," promises Mats Agervi, a tall, enthusiastic Swede who is vice-president for global delivery at IBM Global Services India.
IBM is under pressure to lower the costs of service delivery. Until the Indian software services companies emerged as serious rivals two years ago, its huge services workforce was distributed primarily within the regions where the work was done. One result was that its compensation costs -- and therefore prices -- were high. With the tech bust and the rise of the Indians, that strategy no longer worked. So IBM is in the middle of a massive retooling and migration of its workforce. It recently fired 14,000 services employees in Western Europe, the U.S., and Japan -- even while it's hiring in India and Eastern Europe. BM isn't the only company expanding rapidly in India. Accenture (ACN ) has about 14,000 employees there, and Hewlett Packard (HPQ ) has 10,000, according to Technology Business Research Inc.
The most notable point is "The Indian competitors are expanding their own workforces in India -- and setting up programming and call centers elsewhere, as well. So far, though, "they're not in the same league. They don't have consulting, and they're not as global as IBM and Accenture". Infosys has come with a similar setup recently.
The deeper IBM goes into India, the less it will seem like an outsider and the more it will become part of the local landscape. At the same time, India will be an important stop on the global talent supply chain.
"In the future you'll have two kinds of operations. You'll have innovation factories scattered around the world, and you'll have people within countries who can deliver to clients the value created in the factories," says Agervi, IBM's global delivery vice-president. Ultimately, if IBM gets this right, IBM India will produce a lot of both.
Most western companies have started to restructure their process as global delivery models which has promisingly proved to be successful . India is coming up as a global competitor in services, but a more emphasis on Technology, consulting and products could be stressed.
Category:India,IBM,Outsourcing
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