IBM was perhaps the first global technology company to realise the potential of India as a market. It established the hardware manufacturing unit in India in 1951, and exited in 1978, a few years after the Foreign Exchange Regulation Act (FERA) was implemented. In 1992, Big Blue, as the company is termed, re-entered India with a joint venture with the Tatas. Since its inception in 1999, IBM India Pvt Ltd’s journey in India has been a successful one. IBM would complete 100 years of its founding on June 16 this year. Shanker Annaswamy, managing director, IBM India and regional general manager, IBM (India and South Asia), in an interview with Bibhu Ranjan Mishra and Pradeesh Chandran, talks about the company’s journey and what made it so successful in India. Edited excerpts:
In the absence of any numbers to show, on what basis do you claim to be the leader in the information technology (IT) services space in India?
These are all published figures, not by us. IDC publishes the reports. According to the latest published IDC figures, our services share in India is more than two times that of our nearest competitor.
Even though IBM was perhaps the first among global technology majors to enter India, IBM India took birth in 1999 when many Indian and global IT firms were already here. What made you more successful in India?
When we came to India in 1992, we were basically a product company. And then, somewhere in 1997, we launched the IBM global services (IGS). For services business, you just can’t rely on your global headquarters for research labs. So, we set up these labs in 1998 and 2001 co-located with our services business. If you look at our business process services, we develop the tools here to mine the structured and unstructured data that comes in, which helps us offer insights to clients. These were the game changers. But the biggest game changer is our ability to bring in global best practices and fine-tune it to specific industry and verticals based on the local needs.
Industry experts and analysts feel telecom is an area which gave you more visibility. Why is that so?
When we announced the Bharti deal in 2004, it captured people’s minds because of the sheer size and the complexities involved. It took us another three years to announce the deals with Idea and Vodafone in 2007. That is because during these three years, people understood whether this strategic outsourcing business model was really going to work or not. Of course, the Bharti deal was the first mega deal for the company and we transformed that (telecom) industry working with a couple of other clients. We are now replicating the same model across others.
Not many people can afford to wait for three years to get another such deal. Do you think your patience has paid off?
Patience is a big thing which is needed in our business. IBM had to bring its full global expertise which we were confident would be successful. Actually, when the third deal happened (in telecom), it came within a month of the second deal. So, it was very important for people to understand the model, understand the power of what IBM could do. Once you bring in sustainable and quantifiable benefits to your clients, you will succeed.
Are you replicating this model across other industries?
The models we are offer to other industries like travel and transportation, banking and public sector, are not the same as those we offered the telecom space. We have to fine-tune it and do it separately.
In terms of your focus area, will there be a change, especially with emerging opportunities?
For us, the first focus is obviously the telecom business. We are seeing newer opportunities in the telecom space like value-added services and Wimax. We also think there could be a synergy between telecos and the banking and financial services. In banking, the first wave was core banking where we played a big role working with some major banks in the country. The next big wave that is going to come would be in the form of data warehousing and payment systems. IBM has taken a big leap by winning the first and the biggest one in this space —from State Bank of India. Infrastructure is another big area. Public sector is a very big area with plenty of opportunities. But we have to be selective in picking the deals.
Why are you so selective in picking deals in the public sector?
In the public sector, you have to pick and choose after considering various factors. This is because the government procurement model is such that there is a long lead cycle and the terms and conditions differ from department to department. When you commit yourself and bring in resources, you have to be selective in picking the sectors you want to work in.
What role do you intend to play to tap the next wave of opportunities in the banking and financial services space?
Data would drive technology adoption banks in India. For example, a large bank like Canara Bank has 3,000 branches. It has many offerings and is into sectors like industry, agriculture and, small and medium businesses. You need to really bring a kind of a dashboard in front of the chief executive officer to show how the assets and loans are performing and how they compare with other banks. If you are able to bring in these details, the business people would be able to transform their businesses well. The ability to analyse the data and provide insights becomes very important for the banks.