IBM sees India as its global hub by 2010
Monday, December 10, 2007 at 0000 hrs
NEW YORK:: Betting big on the ‘India advantage’, IBM, one of the world’s biggest information technology (IT) companies, eyes India as its hub for global delivery, providing research software, besides contributing significantly to the company’s revenue. Talking about its road map for 2010, IBM vice- president (financial management) Jesse Green said, “We think of India as a support to IBM. The country will be a hub of global delivery which will help us improve margin components and growth initiatives.”
The IT giant, which is already working with local telecom major Bharti Enterprises and has entered into pacts with some other Indian corporates, expects its revenue from the country to touch the $1 billion-mark by the end of the year. “We expect our revenues to reach $1 billion by the end of this calendar year, up from $700 million in 2006, driven by strong factors. In the first three quarters of the current financial year, our revenue has grown by over 39 per cent,” Green said. The recent deals with some of India’s big corporates are likely to contribute a good chunk to IBM’s revenues. Besides Bharti Enterprises, the IT behemoth has also entered into agreements with BSNL and Idea. Other big names to have inked pacts with IBM include realty major DLF, Central Board of Direct Taxes, Delhi International Airport, Financial Information Network and Operations and Apollo.
The $1 billion would include revenues from services and solutions provided by IBM to local clients and other global corporates operating in India, along with total revenues of IBM Daksh — its business process outsourcing unit. Green said factors such as competitive offerings, effective sales force, strong brand name, and technology base along with the ability to offer hardware and software combination would contribute to the expected figure.
Last year the company’s India revenue grew by 37 per cent against the same in 2005, while the compound annual growth rate from 2002 to 2006 is over 49 per cent. “The company experienced broad-base growth during 2002-2006 in telecom, financial services and small and medium businesses, growing at 58 per cent, 34 per cent and 35 per cent respectively,” Green said.
IBM brings world’s fastest chip to India
BANGALORE: IBM has launched the world’s fastest computer processor chip, called the dual-core POWER6, in India. With this launch, the company’s System p570 — which the company says is the world’s most powerful midrange consolidation machine — and bladeCenter JS22 servers, both powered by the new chip, would be available in the country, said IBM India and South Asia director (systems and technology group) Shashi B Mal. The POWER6 features virtualisation capabilities — a means of server consolidation — and is also the latest addition to IBM’s Project Big Green initiative. It allows “unparalleled power savings on mid-range servers,” Mal said.
As an IT project person for a Fortune 500 company that does a lot of business with IBM, and who has first hand knowledge of IBM’s offshoring and deals with them on a daily basis, let me just tell you this; you get what you pay for.
The work we get from offshore development is about 1/10 of the quality that we used to get from in-house developers. This may save money on the actual man hour to produce a segment of code, but in the long run, it costs more to go through 5x as many testing, shakedown, and patching cycles than it does when you get it right the first time.
randog is 100% spot on - it is a myth. You may show a return on a bottom line in one focused area, but the shoddy quality of work spills over into costing more in others, which by the way, aren’t offshored.
I hope Boeing has some good QC procedures in place, for their own sake.
The Western companies look to the Orient and see vast new markets for their products; the governments in the East insist on being given the latest technology and trade secrets for pennies on the dollar as a "condition" of opening up their markets; and in the future, after the intellectual knowledge has been taken, the factories and other offshore assets will be either nationalized or undercut by copy-cat competitors.
The fallacy of course is that the societies of China and India have never been historically favorably to a large, enduring middle class, which is the target market of the large corporations. The question is whether the sudden influx of Western wealth will continue to be absorbed by a small coterie of robber barons, or enough of the wealth will spill over to create middle classes, or whether the increasing chasm between the haves and have-nots will lead to a second wave of Marxist revolutions: and resultant Communist countries having both a marked population advantage *and* technological parity, and economic superiority (for the time being) with an aging West.
The achilles heel of China will be its environmental disasters and the one-child policy; the achilles heel of India will be its abysmal bureacracy and fourth-world infrastructure (the roads don't suck, they Lewinsky.)
(The problems of the West are well-known on FR, and need not be described in detail here.)
And the Western CEO's who were behind it all with either be retired, or come crying to the US government for help.
I applaud India for the organic growth, as in Mittal Steel and Tata Motors, for example. But the outsourcing of key components of the US defence industry should be punishable as treason.
As one humorist put it, the entire history of the human race can be summarized by the following two questions:
1. What could possibly go wrong?!
followed shortly by... Cheers!
...oh, and Merry Christmas.