Monday, June 12, 2006

IBM: I Stands for India.!!

India's economy grew 9.3% last quarter, and it is still home to the world's largest, fasting-growing offshore outsourcing sector, which generates about $17.3 billion in revenues and employs nearly 700,000 people, according to the McKinsey Global Institute.

India’s IT groups pose a growing threat to the global status quo. As services have become more standardised, big clients have split large IT outsourcing contracts.Indian outfits such as Infosys and Tata are among the best-managed companies in the emerging markets.

What does this mean?

1.A few companies back out !... Apple Computers subsidiary in Bangalore was let go recently. (The company will maintain a small sales and marketing arm in the city.) Apple spokesman Steve Dowling would only say the company had "reevaluated our plans" and decided to focus support center activities in other countries. ! There are rumors that Intel is reducing its head count in India.

2.A few companies gear up for the big challenge.
IBM plans to invest $6bn in India over the next three years – the country’s biggest inward technology investment – as the US group builds its presence in the world’s largest offshore technology services market( Read article here)

“I am not going to miss the [India] opportunity,”
Sam Palmisano, IBM’s chief executive, told a gathering of 10,000 IBM staff in Bangalore

The IBM CEO writes in the Financial Times today an article on how "How multinationals have been superseded"

In a letter published in The Financial Times for June 12, Palmisano said the old model of the multinational corporation should be scrapped. He favors a new type of enterprise that integrates all aspects of a company – research and development, produce design, etc. – across its international operations.

Having a large footprint in India also helps IBM keep close tabs on the local tech industry. Indian outfits including TCS, Infosys ,and Wipro pose a serious challenge to Western tech-services companies due to their low costs and high quality work. "We don't consider the Big Six outsourcers to be our threat," says Longseth. "Our competition is Wipro and Infosys. We see that if we don't move quickly, the Indians will be doing to strategic outsourcing what they have done to applications development."


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