IBM
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Just how far has IBM gone in its quest to evolve into a "globally integrated enterprise"?
Across the board, IBM is transforming itself from a multinational corporation, wherein all national divisions are self sufficient, to a ‘globally integrated enterprise’, where huge departments in a single country provide services for the company across the entire globe. All of IBM’s procurement work, for example, is now handled in Shinzen, China.
India is IBM’s global IT services delivery power-house, providing infrastructure management, application management, consulting and business process management to clients across the world through Global Delivery Centres in Hyderabad, Kolkata, Chennai, Gurgaon, Pune and Bangalore.
“Companies came to India looking for low cost labour,” explains Michael Cannon-Brookes, vice president of business development in China and India for IBM. “But the sheer passion and creativity among the workforce is astounding.”
The irony is that IBM only re-entered the India market in 1992 (after leaving in 1978 for political reasons). Today an estimated 45,000 of IBM’s 190,000 Global Services employees are sourced out of India, and rivals grudgingly acknowledge the company’s formidable achievement in rising to become number four in capacity behind Indian's top tier of TCS, Infosys and Wipro in a mere half a dozen years. They also point out that IBM has been paying salaries of 15%-50% above market rates, and sometimes transfer fees, as a lure to their employees.
Not all of that ramp up has been organic. In 2004, IBM bolstered the offshoring capability that came with its 2002 buy-out of PricewaterhouseCoopers with the $150 million acquisition of Indian BPO company Daksh. This combination of a local company, with its intrinsic understanding of the employment market and culture, and the global delivery mechanism of IBM has worked well: IBM Daksh has grown to over twice the size in two years. It has also enabled IBM to move up the value chain in terms of the services offered to customers.
Burgeoning demand offers IBM a huge opportunity to prove the value of its global delivery model: although its major challenge remains the transition from old-school outsourcing. However, the low-cost, high-growth nature of its Indian resource base fits well with a mature, technologically grounded consultancy-driven business.
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