Business Today

Big blue rising

Forget low-cost, IBM is here to innovate.

By Rahul Sachitanand        Print Edition: Sept 23, 2007

With Indian IT services companies like Infosys and Wipro making their presence more acutely felt on the global stage, the pressure seems squarely on legacy players such as IBM to maintain their position on the top of the food chain.

While IBM has had some sort of India presence for six decades, (although it did get the sack in 1977), it's only over the last three-four years that the company has looked beyond low-cost here.

While Indian it vendors have been playing the cost and quality card to bolster their businesses, older players such as IBM and EDs have had to lean on their decades-long industry expertise to stay ahead of this chasing pack.

"Indian companies are strong in delivery and execution, but we believe that we offer a much broader set of capability across our hardware, software and services offerings," says Virginia Rometty, Senior Vice President for IBM's $16- billion Global Business Services unit.

Virginia Rometty
IBM's Rometty: Shift in course

While the rise of Indian it services companies may have caught many of their western companies off guard, Rometty believes that they have some way to go before becoming truly global companies. "We've spent decades building our network and expertise," she says, who argues that they are able to offer customers more than just a low-cost India base. "India is part of a global 20-location network of centres for us," she argues, "we're no longer about low-cost alone; innovation is key to our story here."

She points out that besides the usual army of coders and associates that IBM would employ, it has set up several global competence centres in India to upgrade capabilities. "We have centres of excellence in sap, telecom and financial services that develop solutions for both domestic and global customers," says Rometty.

While IBM's overall margins are around 10 per cent (compared to the nearly 30 per cent for its Indian rivals), executives believe these figures will improve as the company globalises its presence. "In our last board meeting, we laid out plans to grow 1½ times the speed of the local market and obtain 5 per cent of our revenues from emerging markets by 2010," says Rometty.

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