Global IT firm IBM along with its financing unit IBM Global Finance (IGF), is changing the way IT procurement is done in India.
IBM’s integrated managed services (IMS) unit along with IGF have come up with a bundled procurement process for firms. Under this programme, a company can share their IT specifications right from PCs, printers to services and also get a staggered payment structure from IBM.
“This is for the first time that we are doing in India. We realised that clients were procuring PCs on their own, then deal with us for financing and then work with IBM for solutions. So IBM’s IMS team will procure the hardware, and wrap these with their support systems. The client will also get financing for all this from IGF and get one pricing for all this. That again will be in a staggered payment structure. This would be a one-stop-shop for clients,” said Sapan Kumar Jain, Country Executive, IBM Global Financing, India and South Asia. The programme launched two quarter back already has clients from the banking, BPO and insurance sectors.
IGF that has globally around $36 billion in assets is larger than some of the NBFCs that India has. Operational since 2000 in India, IGF has a customer base in hundred’s. The company has three business lines-- (client financing) lease and loan for IT-based equipment, (commercial financing) short-term financing from 30 to 90 days for IT-based businesses, and (global asset recovery services) financing and buyback of used equipment. While Jain did not give a break up of what constitutes the largest in India, he said that short term financing is still small.
Jain says that the demand for their financing, which had been growing, has picked up further since the slowdown hit the industry. On an average every quarter IGF gets over 200 transactions of all sizes in India.
“The other reason is also because the traditional financing sources like banks and brokers while do finance IT, they also ask for collateral. Unlike banks we understand technology very well and offer customized financing solutions to our client that improves TCO and align IT investment better. We have the in-house ability to refurbish and resale used equipment. In some case we might give a holiday of two to five months and then start the payment cycle,” said Jain. He also believes that the non performing assets for IGF in India are minimal when compared to any bank.
IGF also finances IT from vendors other than IBM. “So we have a 20:80 ratio. That means 20 per cent of the invoice should be IBM invoice, rest can be IT and non-IBM built. Since we are not in the PC segment we provide for a 100 per cent finance in this category,” he said.
For Jain India is an important market as it offers IGF huge opportunity. “The Indian market is skewed towards the SME and hence we see a good opportunity. Besides based on the products our interest rates in case of lease can be as low as 2 per cent.” he added.