5 | IBM India: The India Euphoria

IBM Indias sales figures dont explain CEO Sam Palmisanos

apparent excitement about the country. Theres high growth, but India is still

a tiny market for IBM, bringing in less than 1% of its global revenue. That is

less than half of what it gets from China, or even Brazil.

Yet, IBMs India euphoria is for real. At stake is the countrys

vast talent pool. HR figures are hence a better indication of what the company

is up to in India. Last calendar year, IBM added 14,500 employees in India,

taking its total manpower to 55,000one-sixth of its global workforce. Within

Indian IT, it is next only to the Big Three services firms. That kind of

resource-building explains the $6 bn investment plan that Palmisano announced in

June last year.

That does not mean that Indias domestic market growth is of

less importance. FY 07 saw IBM India revenue growing by 35%better than in

most major emerging markets, including other BRIC markets. And that came with an

all-round growth across sectors. While 50% growth in telecom revenuesthanks

to the huge Bharti outsourcing deal struck a few years earlier and a new deal

with Idea cellularwas the main driver, financial services too saw 35% growth.

But the better story was in SMB, where IBM grew about 35%. Government was the

other major growth segment. Overall, growth slowed down a bit in the last

quarter.

FY 07 was also a year in which IBM saw its services business

grow at a healthy rate. The other major outsourcing deals of the year were those

with Fino and DLF. Though nowhere yet near the global share, IBM Indias

services business, with close to 37% of total business, has come into its own. DQ