Nearly a year after he announced a three-year, $6-billion investment plan for India, Sam Palmisano, chairman and chief executive of International Business Machines Corp., the world’s largest software services vendor, is visiting India to review the company’s operations in the country, the biggest for the company outside the US.
Prior to Palmisano’s sixth visit — two of which were after he became IBM’s chief — Michael Cannon-Brookes, vice president, business development, India and China, talked to Mint on the company’s plans in two of the fastest growing markets for tech services in the world and how important China and India are to IBM’s delivery of services to the “globally integrated enterprise”. Excerpts.
Tell us about China and India in IBM’s scheme of things.
India and China are two of the most strategically important markets for our business. India’s domestic market is the fastest growing market for IBM around the world, and China is already a big market for us. The question for us is how we best leverage these for IBM globally. How do we use the largest pools of high value skills, talent and innovation in these countries for IBM and its clients throughout the world? How do you communicate back to people in head office, the multi-faceted nature and importance of India and China? We look at it through three prisms. First, is the hyper growth in the domestic opportunity. (The) second (prism) is that it is the hub of global innovation in software development. For example, in India we have the largest software development lab outside the US and one of the eight major research labs outside the US. We are taking the skills and talent innovation that we get in the Indian marketplace for use globally. So India is the hub of high-value global innovation. (The) Third (prism) is (that India and China are) the hub of global delivery such as application management services and business transformation outsourcing. These three prisms gives these nations a multi-faceted nature.
Do you see particular skills mostly coming from specific regions? India for BPO work, Eastern Europe for high-end chip-level work and China for supply chain procurement work?
The world is becoming much more global. It no longer looks at India as India or China as China. You need different kind of skills for different contracts as more clients want a solution to a complex business issue that in many cases is global, and to do that you need a lot of different skills. You go to where the skills are present, and the real differentiator is how you pull all those skills together.
In India we set up a global business solutions center in Bangalore last year which supports our partners around the world in the consulting business. It’s a place from where we take a lot of the solutions (developed by the consulting side) around the world, turn them into assets and then reuse them with other clients.
Talent is mobile by its very nature and you have to be always looking for new pools of talent, and we are constantly doing that.
What are the big challenges that you face with talent supply in India going forward and how do you deal with competition from Indian companies that hire from universities?
We do a lot of university hiring and there is no way we can grow at what we are from lateral hires. When you grow so dramatically, you got to grow managers as well as people.
India is a highly competitive market. Reason we go to tier 2 and tier 3 cities is (because) India has a large talent pool.
IBM has won outsourcing contracts in India from companies such as Idea Cellular Ltd, Bharti Airtel Ltd, Hutchison Essar Ltd, etc. What do you see in India that the local software firms such as an Infosys or a TCS do not?
India is a hyper growth market and what is important is what clients see in us. What value that they think we can we provide to them. On our part, we offer the total IBM value proposition. First, we provide a huge global expertise in the telecom industry. Second, we have a willingness to understand the business as well as the technology side. Third, we have a lot of solution assets in that particular industry that can give huge value and global experience. Bharti has managed to grow explosively based on the support (from IBM). It can continue to get into new businesses with this kind of support.
Wha is the status of IBM’s investment plans in India? You announced a $6 billion investment over the next three years last year. Where are we on that investment?
We don’t break up numbers but all we can say is that we are on track and investments will not be in only one particular area or project. New centres are opening up, dramatic increase in head count will continue, and new technology is coming in.
What are the risks with your global strategy?
The risks will have to be around skills. They can be a benefit as well as a risk, because you have to constantly be thinking and you have to be very flexible in your approach. You have to know what kind of skills your clients need and where you can get that pool of skills. Countries are becoming very competitive and you have to constantly look at where the skills are available and how you will tap and leverage into them. The world is a challenging place.