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Shanker Annaswamy managing director |
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India CEO Shanker Annaswamy says they're steps in the "transformation
into a solutions company": the services thrust, the manpower ramp-up in
India last year...two years after the global acquisition of PwC and its 30,000
people that created the world's largest consulting organization, and Rational
Software, inter al. The most recent step was IBM's exit from the PC business.
End-2004 saw the $1.75 bn sale of IBM's PC division to China's Lenovo;
IBM India's PC division head Neeraj Sharma became MD of Lenovo South Asia; in
the US, IBM veteran Ravi Marwah (once head of the Tata-IBM JV in India) moved
over to Lenovo as head of worldwide sales.
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Overall, India sales (just under $1 bn in 2004-05) are a tiny 1% of IBMs
global revenues. Of IBM's $96 bn global pie of 2004, 22% came from
Asia-Pacific; but India has just 5% share of that APAC slice. But India makes up
5% of IBM's global workforce-that's thanks to the global services exports
activity.
The trend is clear: IBM is moving to services (and software), and away from
hardware. Half its 2003 global revenues came from services (at 25% gross
profit); and that share will increase further post Lenovo; in India, that's
25% of revenue, or nearly 60% if you count its services exports (DQ estimates).
With strong recruitments in the services organization, IBM India's exports
went from 34% to 46% last year. And the whole operation in India is now part of
one company: IBM Global Services India Pvt Ltd.
The big win was Bharti, a ten-year IT outsourcing deal signed in March 2004.
Worth over $700 mn, it involved the transfer of Bharti's IT-related assets
(including people) to IBM.
With the PC business on the block toward the end of the fiscal year, IBM's
systems sales focus moved on to servers. It topped the server market by revenue
share in 2004 with over 30% share (IDC) and 16% growth. It was especially strong
in Intel-based (xSeries) servers with 20% growth and 36% share, well ahead of
HP. Unix server performance was far behind, though the August launch of Power
5-based systems helped a bit in the second half. Server and services customers
included Bajaj Auto's data center, Mahindra, HDFC, Yes Bank (from its SMB
sales division), IDBI, and Aviva Life Insurance (some of these, post fiscal
2004-05).