Rank 5: IBM India: Services as Savior

When the fight gets tough, the tough sometimes walk away. And these
are tough times. IBM India’s systems’ revenues declined 10% last year, after
36% growth. The 7% overall growth had one reason: services. With margins that
helped it ‘walk away from deals when vendors discounted to an extent that no
longer made sense’. Competitors say IBM was hardly visible. IBM says it’s
about positioning. "Customers remember prices…if we quote X minus ten
now, will they easily agree to X when things look up?"

Performance Highlights Services grew, systems declined Strong gains in banking Class B/C cities thrust Expended to new offices in Bangalore, Mumbai, Calcutta, Chennai Strengths Extensive, though complex, channel network Powerful enterprise systems brand equity Weaknesses Not seen as aggressive/responsive enough in enterprise segment Not present in fast-growing telecom space IBM India Ltd. l Startup: 1992 l Products & services: Sales and marketing of IBM servers, PCs and software products and services (SI Consulting, ITES, Software Developments l Branches:14 l Address: No. 12 Subramanya Arcade, Bannerghatta Road, Bangalore 560 029 l Tel: 2063000 l Fax: 2063871 l Website: ibm.com/in

IBM India and IBM Global Services (IGS) work closely
together, one backing the other’s systems sales with services. IGS also takes
up SI and other areas like outsourcing–for Tisco, Ballarpur, et al. It
absorbed 46 IT staff from ABB this year: in a five-year outsourcing contract, 50
IBMers now make up ABB’s IT arm in India.

But over 40% of IBM’s pie is exports. IGS tops the ‘DQ 20
MNC Software Exporters’ list. (Local software sales, mostly Websphere and DB2,
added up to a byte over Rs 50 crore.)

All this gave IBM funds to spend on marcom, and on spanking
new offices in Bangalore, Mumbai, Chennai and Kolkata. A big push saw channel
sales up over 20%, through its many distributors. Its top ‘vertical’:
banking, again, partnering with iFlex, and now Infosys. Big deals included a
core banking solution for 200 branches of Syndicate Bank. Its only big losses:
PNB, and South Indian Bank, both to Sun.

Next came manufacturing, including the auto sector. Then, the government and
public sector, often through SIs: CMC, TCS, CMS, and now Wipro, which has good
inroads in oil and other PSUs. The gap was telecom, where apps mostly run on Sun
hardware, though a year-old Telco group in IBM is now pushing Intel-based
solutions. The drive ahead is uphill, but clear. Recover lost ground in systems,
taking on the new HP, and Sun (with HCL). And grow domestic services, now 26% of
the Rs 1,045 cr domestic pie, versus the worldwide 40% of ($86 billion). And
hold on to its Top 5 position.