Back in 1992, IBM re-launched its India operations, following a hiatus of more than a decade when political pressure drove many multinational companies, including IBM, out of India.
Growing modestly until the turn of the millennium, IBM India has been growing by leaps and bounds since then. Its workforce now totals 38,000, up from 23,000 two years ago and second only in number to IBMs U.S. workforce among countries in which IBM operates.
Infosys, by comparison, counted approximately 36,000 employees in its 2005 fiscal year.
In January, rumors surfaced that IBM was in talks to buy a stake in Satyam Computer Services, Indias fourth-largest IT outsourcing firm. However, Ramalinga Raju, Satyam chairman, denied there had been discussions.
"There was no dialogue. There is no intent," Raju said in an interview at the recent Nasscom conference in Mumbai. He added that foreign firms may be eyeing Indian providers, but, "The question is, what companies are willing to be acquired?"
IBM scored two key coups two years ago that are fueling todays growth. In March, 2004, IBM signed with Bharti Televentures Ltd. a mutual outsourcing deal in which IBM took over IT services for New Delhi-based Bharti, and Bharti became a preferred supplier of telecommunications services to IBM India.
In addition, the two companies agreed to jointly develop and market IT and telecommunications services in India. One month later, in April 2004, IBM acquired Daksh eServices, a business process outsourcing firm headquartered in Gurgaon, India.
Mats Agervi, vice president of global delivery for IBM Global Services, India, is a Swede who has worked in several different countries during his IBM tenure.
He said IBM approaches India as both a fertile market and as a source of skilled, yet low-cost labor for IT outsourcing and business process outsourcing.
"We are very keen on getting [market] share here," said Agervi in an interview in his Bangalore office. "India is also important for global services delivery," he added.
He explained that IBM Global Services consultants analyze customers businesses in the United States, and then send specifications to IGS in India where domain experts in different industries go to work building applications.
Other work being done in India includes managing IT operations from some 220 customers all over the world. IBMs control room at its offices in Bangalore looks like what you might find at the headquarters of any major outsourcer—a darkened theater-like room full of rows of monitors, with operations staff either seated at them or milling about.
In addition to remote data center management, the work includes security services, such as vulnerability scanning and patch management.
IBM aims to keep building its already large presence. "By 2010, we will double our headcount in India," said Agervi. "The talent pool in India will be good for many years. I think we are just at the beginning of globalization, of what can be moved to another place."
Expanding in India presents its unique challenges to a seasoned multinational company like IBM. "Working in India is different. Its hard to find people with old skills. The India workforce is young. You need to think different," said Agervi.
Some companies have encountered cultural differences that must be bridged. IBM has a plan to address this issue. "We are training people in cultural differences. There are not huge problems. IBM in Sweden is not that much different than here. IBM has a strong corporate culture," said Agervi.
A common understanding of quality goes a long way to bridging gaps, said Agervi. "India quality is CMMI 5 (Capability Maturity Model Integration Level 5), the highest you can get. This helps overcome differences. We can use processes IBM developed and implement them in India," he said.
Without mentioning numbers, he acknowledged wage inflation is an issue for IBM in India, as it is for all IT companies there. Turnover is higher in India than at IBM operations in the United States and Europe, Agervi added.
The answer, he said, is to put a few more people on a project than you might otherwise, and to document everything carefully, he said. "Knowledge attrition is what matters," Agervi said.
Simply being IBM is another weapon. "We want [new hires] to become IBMers. If you make them IBMers," said Agervi, "The attrition is much less."