New Delhi: International Business Machines Corp. or IBM, which makes almost two-thirds of its $13.3 billion (Rs52,535 crore) global pre-tax profits from hardware and software sales, plans to increase the spread of its phone and Web sales teams in India by setting up centres in Mumbai and New Delhi by end-2008.
The teams will help IBM better understand requirements of customers in the western and northern regions in India, the world’s fastest growing market for software and hardware products.
The new teams in Mumbai and New Delhi—in addition to one based in Bangalore—will focus only on sales through a distribution channel IBM calls “Ibm.com”, referring to online and phone-based selling at the company. The Bangalore Ibm.com centre employs around 100 engineers and business managers to sell to up to 10,000 customers—both existing and prospective—complementing its sales partner network of 2,500 distributors and retailers.
Initially, each of the “satellite centres” at Mumbai and New Delhi will have between 10 and 15 people, with plans to scale this up later, said Sanjiv Pande, vice-president, Ibm.com, India. The tele-Web business channel, through which IBM sells hardware, software, and services, is mostly aimed at price-sensitive small and medium business.
“Around 60% of IBM’s revenues in India come from small and medium businesses, nearly half of which come from ibm.com. In terms of volume, ibm.com forms 90% of all SMB customers,” Pande said. IBM defines SMB or small and medium businesses as having less than 1,000 employees or Rs100 crore revenues.
IBM does not disclose country wise revenues, but trade magazine Dataquest estimates the company’s India sales at Rs3,380 crore from software, storage and server products in fiscal 2007.
The sales through Ibm.com in India are thrice that of the channel’s share globally for the company. In 2006 (IBM, like for most US companies, reports results for the calendar year), ibm.com accounted for 10% of the company’s $91.4 billion revenues.
The opening of the new centres is part of a drive to develop a stronger regional focus in a large country such as India. “We want to spread out to Mumbai and Delhi to form closer relationships and more proximity to our customers so we can tap the regional trends and requirements better. As the number of customers who buy IT in India grows, there are many regional trends that overtake national trends,” said Pande.
An analyst said while it is still early days for the online sales channel to pick up in India, the consumer market becoming more brand-conscious might be an advantage for Ibm.com in India. “Besides, large companies such as IBM may want to be available in 400-500 cities in India. This (Ibm.com) is the fastest and the easiest way for them to ramp up their presence in India in places (where) their partner network may not be as strong,” said T.S. Mohan Krishnan, vice-president and country manager at Bird, the technology consultancy arm at research firm IMRB International.
In the Asia-Pacific region, other than India, China, Hong Kong and Taiwan and the region covering Singapore, Thailand, the Philippines and Malaysia were among the fastest growing for ibm.com. In Asia Pacific, Ibm.com has a team of 1,500 people.
“India is among our fastest growing regions in Asia Pacific for Ibm.com, and our strategy in this region is to focus on the fastest growing economies and leverage different parts of IBM to best react to marketplaces. The Web is an integral part of everything we do and five years down the line, it will emerge a significant channel for doing business,” said Nic-Nuske, vice-president, Asia Pacific, Ibm.com.