IBM has an Indian workforce that is second in number to the company’s headcount in the United States. The last few years have witnessed stellar growth of IBM India not only in terms of manpower but also in revenues. India is the key market for IBM. The booming technology and the telecom sector have put the country on the path of a fast-growing economy. As a result, India has emerged as a business destination of technology companies. IBM seized the initiative and is a company on the move in India.

International Business Machines (IBM) of Armonk, New York, rolled out the IBM 5150, which is universally recognized as the ancestor of the modern PC. Today, PC has become a member of the family. There are many people who spend their time more with the PC than their family members. However, gone are the days when IBM was seen mainly as a hardware business.

In recent years, the company has established itself as a services firm. And, last but not the least, it is one of the largest software suppliers in the world. The company’s software business is worth US$16.8 billion, larger than most IT firms. Recently, IBM has bought three software firms in quick succession, including two very big-ticket acquisitions – FileNet for US$1.2 billion and MRO Software for US$740 million. The BIG Blue has swallowed some 31 software companies in three years.

As the company focusses its attention on the software, the result is the increasing contribution of this sector to the company’s revenue. While the company overall grew at just 1 per cent in the second quarter, software grew at 4.5 per cent, reporting revenues of US$4.2 billion.

India Operations…
“IBM is excited by the opportunities in India over the long term and we are also encouraged by the domestic opportunity that India offers,” said IBM CEO Samuel”Palmisano while addressing a gathering of 10,000 employees, investors and analysts from across the world at sprawling Palace Grounds in Bangalore in 2006. That was a far cry from the days when IBM first entered India in 1968, one year before the nationalization of banks in the country. Adoption of the socialistic pattern of society, reinforced by the Avadi Session of 1954, was the rallying cry of the time.

Overseas companies were finding it difficult to operate in that context. Matters reached a crescendo in 1978 when IBM had to leave India. However, things began to change from 1991. The year saw India shedding her socialistic economic policies with utter disdain. Liberalization became the buzzword. FDI norms were relaxed. Government took steps to boost foreign direct investment, implement tax reforms and privatize several large enterprise organizations. In many cases, the knock-on effect of those moves has trickled down into the channel and provided a far more wholesome market for vendors and resellers to make their presence strongly felt.

Time was ripe for IBM to re-enter the territory once chartered by the company. A beginning was made in 1992 when the Big Blue entered in a joint venture with Tata. And thus came into being Tata IBM. 1999 proved to be another watershed in the history of IBM when the company bought out the Tata’s stake in the company and IBM India became a fully-owned subsidiary of IBM Corporation. The intervening period saw the setting up of IBM Global Services and India Research Lab in the IIT–Delhi campus in 1997 and 1998, respectively.

Though it was a modest entity in the beginning of the new millennium, IBM India has been scaling new heights for the last few years. Its workforce now totals 73,000, which is a giant leap from about 4,900 in 2002 and the company’s largest outside the US. The real push came after 2003 when the company began making India an important base to support services for customers around the globe. In fact, India has become the epicentre for some of IBM’s most important projects. “

India has played an important role in our global strategies and has been a critical asset to our globally integrated enterprise model. India grew to become an independent region in our global operations, and with 73,000 employees, remains the second-largest talent base after the US,” says Anoop G. Nambiar, Country Manager – Business Partner Organization, IBM India/South Asia. 

The spurt in growth has partially come from acquisitions. IBM inherited 6,000 employees when it bought Daksh eServices for $150 million, then India’s third-largest back-office services firm headquartered in Gurgaon. Revenues from IBM’s India operations are also rapidly increasing. IBM’s Indian revenues have touched $750 million (Rs.3,000 crore), making it the largest IT company in India. Next year, it expects $1 billion (Rs.4,000 crore).

IBM makes no secret of its plans for India. In fact, the Big Blue identified this country as one of its most important targets, and it has backed that up with huge investments. During his visit to India in 2005, Samuel Palmisano announced a whopping investment of $6 billion in India over the next three years, three times the amount the company has already invested in the country since its re-entry to India in 1991. This investment is considered to be the biggest by an MNC in the country in the recent past. The investment will be used to build service delivery centres in Bangalore and create a telecommunications research and innovation centre for customers across the world.

Reaffirming its commitment to fast-growing India, Anoop G. Nambiar says, “India continues to be our fastest growing market globally and clearly seeing the potentially of the market we committed an investment to the tune of US$6 billion in 2005. Our aim is to make India the hub of our efforts to combine high-value innovation with cutting-edge services to empower all stakeholders with the best that IT can offer. We have more than 3,200 of the country’s best technology and research professionals engaged in cutting- edge technology work, and more than 35 excellence centres that focus on different aspects of technology and services innovation.””

In March 2004, a mutual outsourcing deal was signed between IBM and leading cellular carrier Bharti Televentures Ltd. The deal facilitated the taking over of the IT services for New Delhi-based Bharti by IBM. Bharti became a preferred supplier of telecommunications services to IBM India. Since then, IBM has been racking up deals in India faster than any of its local competitors. In the first half of 2007 alone, it signed some $1.4 billion in long-term contracts. IBM in India has not lost sight of the fact that India can bring enormous advantages to its clients. The company unveiled its cloud computing centre in Bangalore to host computing activities for enterprises, provide access to expertise and infrastructure for clients to design and deploy applications. Last month,

IBM announced its largest launch ever of new storage hardware, software and services, aimed at meeting the demands of cloud computing. IBM launched Europe’s first Cloud Computing Centre in Dublin, Ireland in March, two more centres in Beijing, China and Johannesburg, South Africa in June, and one in Tokyo, Japan in August.

The company has its other Global Delivery Centres at Pune, Gurgaon and Kolkata. They deliver technology solutions to the customers all over the world covering middleware, e-business technologies, enterprise and web technologies, data warehousing across functional areas like Supply Chain Operation Services, Financial Management Services, Human Resource Services, Customer Relationship Management, e-Business Integration and Application Management Services.

IBM in India has expanded its operations considerably with regional headquarters in Bangalore and offices in 14 cities, including regional offices in New Delhi, Mumbai, Kolkata and Chennai. In 2005, the company acquired Network Solutions Ltd., a leading infrastructure services company in India. This acquisition has enabled IBM to augment its networking and managed services portfolio of offerings in India and broaden its reach across the country.

India fits well in the IBM’s scheme of things. With its network of 2,500 business partners covering 41 cities, Cochin in Kerala is the latest addition. The setting up of operations in Cochin was made with a view to catering specially to the unique requirements of the various SMB clients spread in the non-metros in the country. IBM has invested in the development of products and services specifically priced and designed for the SMB marketplace under the brand name’“Express Advantage”. IBM’s Express Advantage comprises hardware, software, services, solutions and financing and is designed to meet specific criteria for SMBs.

SMBs are looking for operational efficiency, lower TCO, security and an infrastructure that is easy to use. Therefore, IBM is focussing on re-architecting solutions to meet these specific SMB needs, including scaling down solution/applications functionalities to suit operational-management capabilities and budgets. “For example, we have invested in the development of products and services specifically priced and designed for the mid-market under the brand name ‘Express Advantage’. IBM’s Express portfolio is comprised of hardware, software, services, solutions and financing and is designed to meet specific needs for mid-market clients. IBM Express Systems are easy to install, deploy and manage and very affordable,” says, Anoop G. Nambiar.

“Now with Express Advantage product portfolio, we are offering complete solutions from IBM’s Software, Systems and Technology, and Services groups – and will address security, business recovery, employee collaboration and energy efficiency needs of mid-sized businesses. The offerings are broadly categorized as point product, infrastructure solutions and business solutions.”

IBM is the largest multinational software services exporter from India. IBM acquired System Management Software company, Tivoli, and has now expanded the Tivoli division to include many core IBM software products. Tivoli was acquired by IBM in 1996. There is no doubt that this acquisition successfully gives Big Blue an edge with its systems management software. Today, IBM is the only vendor that can virtualize up to 80 per cent of a customer’s infrastructure.

As technology keeps on growing more complex, managing IT services has become more challenging. New virtualization software from IBM, Tivoli Provisioning Manager, enables clients to deploy and install software on tens of thousands of laptops, desktop PCs, wireless devices and servers. The new technology helps—users reduce the time it takes to manage and upgrade systems. The storage needs of businesses are growing dramatically. When IBM introduced the IBM 350 Disk Storage Unit in September 1956, its five megabytes could store an image of DaVinci’s Mona Lisa painting. By comparison, the IBM System Storage DS8000 Turbo, can store up to 320 terabytes of information, which is the equivalent of all the images held in the Guggenheim, the Louvre, and the Metropolitan Museum of Art, and more.

“IBM helped kick off the storage revolution fifty years ago with the introduction of the 305 RAMAC Computer,” saiys Shailesh Agarwal, Country Manager”– IBM Storage, IBM India.“ Today, we are working on the next generation of advances that will drive storage innovation forward for the next fifty years.”

Big Blue has recently launched one of the single-largest expansions of its storage portfolio with the introduction of the IBM System Storage DS6000 series. The recently launched new mainframe, the System z9 mainframe by IBM the first in a new generation of machines, focussed on easing security and systems management. The company has also launched its Virtualization Engine 2.0 and revealed more on the plans to establish an industry community based on BladeCenter, dubbed Blade.org.

India is one of the six countries to host an IBM research lab. Based at Delhi, IBM’s India Research Laboratory (IRL) is one among 8 facilities worldwide. Currently, IRL researchers are working on several projects like bioinformatics, text mining and speech recognition for Indian languages, natural language processing, grid computing and autonomic computing, among others.

Channel Initiatives 
IBM works with over 2,500 business partners in India; its Channel Business is important and integral part of its business. “Our channel initiatives are created upon the basis of being in tune with evolving partner needs, understanding their primary growth drivers and establishing a two-way communication channel with them which in turn ensures a mutually beneficial partnership for all involved. Initiatives from IBM include incentives, co-marketing funds or special benefits for the channel partners in India,” says Anoop G. Nambiar.

“One key differentiator would be the fact that we at IBM drive towards ‘effective collaboration’.  We look at partners as an ecosystem, and if it is going to be better than any other competitive ecosystem in the industry, then one of the underpinnings is efficiency. Efficiency is going to come as a result of collaboration,” says Anoop G. Nambiar.

IBM takes the growth of the channel partners seriously and for this the company has taken the initiatives like the periodic training on products, sales incentives as well as various platforms that give them direct access to us. The company launched the Partner Sales Service Centre in India across four regions designed to provide channel partners with services specific to sales opportunities. The unit is a centralized team operating from IBM that will help business partners with product positioning competitive updates customized customer configuration and customized product pricing a company.

Another such example is The Express Advantage centre which connects businesses to an unparalleled network of people, products and services designed to help them solve business and technology problems. Direct access to us is just a phone call away and representatives will quickly and efficiently connect you with the right IBM Business Partner resources so you can get on with your business.

Additionally, the company also has various initiatives including IBM PartnerWorld, Know Your IBM (KYI), Early Access and IBM PartnerWorld University. IBM PartnerWorld has an extensive online and face-to-face training programme for its business partners in order to help them better understand IBM’s product portfolio and develop the skills to compete effectively in the marketplace.

Finally…
As IBM associates more with India, it is truly on its way to be a part of the local landscape. It won’t be an exaggeration to say that sometimes in future IBM may be known as Indian Business Machines, apart from International Business Machines.