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