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A combination of credit crunch and high technology costs, which have reduced Indian companies’ expenditure on IT equipment, has prompted IBM to launch zero per cent financing options.
IBM’s global financing arm, which like Dell and Cisco, finances companies and leases out PCs, servers, storage boxes and other computing devices, is cashing in on high interest rates, unavailability of credit, generally offered by banks and financial institutions.
However, IBM offers financing technology-related stuff and does not compete with banks and other lending institutions. “This zero per cent financing is for software, hardware purchases/leasing and can be extended to non-IBM related products as long as IBM invoices the transaction,” said Sapan Jain, Vice-President, IBM Global Financing, India/South Asia.
Further, the world’s largest technology company has offered to take back equipment categorised as electronic waste. This, according to market watchers is another issue that corporates in India have to deal with and IBM has offered to step in. “With faster technology obsolescence, we gone beyond financing to take backs,” said Jain.
More business
All this has resulted in business for IBM, which, according to its annual report, has seen record revenues, cash flow and profit margins for the company in 2012. Cash flow was $18.2 billion and it had cash of $11.1 in 2013, according to its annual report data.
Despite these numbers, the financing arm struggled a bit in 2012. According to data, it showed reduced growth of 9.5 per cent or $1.47 billion, compared to $1.61 billion in 2011 and the company sees India amongst a handful of countries that will drive growth for this business.
“We grew in double digits in this business in India,” said Jain. IBM’s financing business is a part of IBM and does not give out country specific numbers. IBM sees opportunities to finance Indian companies and government initiatives such as Aadhaar, Department of Post IT modernisation projects.
IT spends
According to a BCG-CII report, IT spending in India is estimated to reach Rs 1.8 lakh crore by 2016.
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