The Hindu Business Line : IBM readies for tough battle in India market

With the Indian IT services providers increasing their focus on the domestic market, vendors such as IBM who have dominated the local market for long, are now facing increased competition.

“Competition has increased,” said Mr Sandip V. Patel, Managing Partner and General Manager, Global Business Services, India and South Asia. “What I think has happened is that the Indian firms that were solely focused on labour arbitrage have turned their attention to India, with the global markets slowing down.”

IBM earns over a billion dollars in revenue from the Indian market.

In the past, the Indian vendors looked at the domestic market as a training ground, Mr Patel said. But now the firms are trying to back-fill the revenue they are losing in key markets and many of them have explicitly stated that they are going to focus on the domestic market.

“Because the focus has increased on the Indian market, the competition is bound to get fierce,” said Mr Sudin Apte, analyst at Forrester Research.

Companies such as TCS, Wipro and HCL have been traditionally present in the Indian market. New entrants include Infosys and Cognizant. “The newer players will be very selective in chasing deals and will focus on deals that are IP or platform-based solutions,” Mr Apte said.

Global IT spends is expected to decline 6 per cent to $3.2 trillion in 2009, while the IT spend in India is expected to grow by 5.52 per cent, according to Gartner.

Sticks to strategy

Mr Patel said IBM would not change its strategy because of the new market dynamics. “We will address it by sticking to our existing strategy of focusing on domain knowledge, offering integrated solutions and moving towards asset-based services,” he said.

The company has made significant investment in creating templates, asset-based solutions and reusable components exclusively for the Indian clients. “The nuances are India-based. While we have a thin level of integration across markets, we believe each of our markets needs to be addressed differently,” said Mr Patel.

Templates developed

IBM had developed templates for sectors such as construction, dairy and utility. While the template for the construction is 98 per cent finished, the company is still working on the solutions for the dairy and the utility sectors.

The company has also developed a template for the steel sector for the global market. IBM has partnered with SAP to create this solution and contains industry best practices IBM has gathered.

“Through these solutions we are able to bring in a lot of re-usable solutions. We are bringing a collection of experience, thinking that a client would not be able to buy off the shelf,” said Mr Patel.

On being asked if the increased competition in the Indian market has prompted IBM to go strong on asset-based services, Mr Patel said, “There is always a push to bring in more assets and templates. I don’t know if more competition pushes you to do more. If we wait for competition to hit and then bring in more assets, it would be too late.”

In India, the key verticals for IBM are telecom, the infrastructure space that includes construction, steel, industrial products and energy and utilities. It also sees opportunities in insurance and banking, travel and transportation, and the government space.

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