We foresee major outsourcing by India clients ahead: IBM GBS country head

In a Q&A Kamal Singhani talks about outsourcing trends, adoption of cloud, digital and AI by Indian enterprises and his firm's approach to startups

While Indian IT services players are busy focusing on the global markets, IBM Global Business Services (which includes consulting, application management and global process services) is boosting its presence in the Indian enterprise ecosystem. Kamal Singhani, country managing partner, IBM GBS is expanding its India footprint. In an interview with Shivani Shinde he talks about the outsourcing trends, adoption of cloud, digital and AI by Indian enterprises and hid firm's approach to startups. Edited excerpts:

How significant is the IBM GBS arm within the company and how much does India contribute?

If you look at IBM, over 60 per cent of business now comprises of services.. GBS revenue for Q2, CY2021 was $4.3 billion, which grew 11.6 per cent sequentially and consulting grew 16 per cent, application management was up 5 per cent, and global process services grew 28 per cent. Our cloud revenue was up 35 per cent. For IBM GBS, India forms a big part of the APAC region.

How does the recent split of the company impact IBM GBS business?

IBM is pivoting into a hybrid, cloud and AI driven company and this mandate is across the company. And the reason for this pivot is coming from the way our clients are moving. Entire businesses are shifting or accelerating towards this digital transformation and in the process they are reinventing their mission critical processes and modernising their application services infrastructure and this is where the biggest shift is happening now. Clients are looking at partners that are strategic and engage with partners who have end-to-end vision and capability. In this shift IBM GBS is emerging as a partner of choice.

We have created a new team that focuses on business transformation and this team infuses AI and uses insights from data into actual implementation of projects. This team is also responsible for process outsourcing for our clients.

As for Kyndryl, it is going to be a different brand, IBM and Kyndryl will continue to have strategic partnership and we will be leaning on them for mission critical skills. In India too we have a team that will be part of Kyndryl.

What are some of the key trends do you see in the Indian market?

We see a huge wave of outsourcing coming back to India. In the next 12-24 months there would be significant outsourcing initiatives taken by our clients here, and these would not be restricted to our traditional tech outsourcing. There will be a significant amount of process outsourcing, in areas such as Finance & Accounting (F&A), procurement transformation outsourcing. We do see good amount of data centre services outsourcing, where client want to leverage the analytics and data services expertise from IBM. This is over and above the traditional tech and application management outsourcing.

The other change we are seeing is, post the incubation of AI and data insights into day to day business decisions, there is no more talks of proof-of-concepts, everyone is now focused on taking transformative initiatives. We have clients who want to leverage data and AI and want us to look at all of their business process…the reason is because they become smart organization, efficient organization, and employees get significant insights into data.

Are there specific verticals where you are seeing this?

There are few industries where we have seen this happening. Heavy engineering, cement, steel, large manufacturing players would want to transform/outsource. Among the BFSI segment the back office and middle layer transformation is becoming key and in that outsourcing the intelligent workflow will come from AI, Cloud and analytics.

The other interesting vertical is the logistics, airport and airlines, as they have taken the maximum hit during pandemic, and they will go for outsourcing because for them this will give them cost efficiencies and also leverage tech.

What trends do you see among the GCCs in India?

This is one sector that is growing very fast in India, and IBM GBS is also focusing in this regions.

GCCs in India are part of the global organisations footprint which are set up for IT capability, many of these companies are our global clients in their respective regions like the US, Europe, Germany etc. but they have set up their operations in India so that this becomes the hub for their entire tech transformation, as well as solutions, creation etc. We have two fold strategy. First, my counterparts in those regions and our India team work closely to make sure that the GCCs in India are serviced in India, and that is growing in double digits for us.

Second, we have multiple operating models to work with GCCs, if they want to set up shared services centre, so we help them built the centre, hire people, help them operate and when they think they are ready we transfer. Or in osme cases we continue to operate as well.

Does IBM GBS also work with startups?

The Unicorns have strong sense of understanding of that are they setting up for. And they are setting up for scale, and innovation, and today you cannot do either without tech. IBM works with some of the Indian startup unicorn’s. Our IBM Garage model caters to startups as it allows them to co-create.

We have been focusing on the startup over the last two years. Today it’s all about agile environments, the concept of PoCs have become dated. In the Garage model, we have our experts work with the team of the company’s experts and we co-create. We work as a single team and come out with minimum viable products. Once the MVPs are ready we go and execute with clients.