)
IBM, the global information technology giant, has signed a multi-year engagement with micro finance provider Janalakshmi Financial Services (JFS). Vanitha Narayanan, the managing director of IBM India, talks of the shift in technologies and how clients are expected to take decisions looking at a shorter cycle than earlier. Edited excerpts of a talk with Bibhu Ranjan Mishra.
IBM is known for its appetite for larger deals. Is there a shift in the company’s approach in the Indian market?
I want to bust a myth — no client is too small for us. I am happy to have all kinds of sizes of clients. Sometimes, tremendous innovation can come in small packages. With regard to JFS, we could not have found a better alignment of our strategy, goals and investments. For example, our objective is to transform sectors through the use of analytics. With JFS, it gives us an opportunity to do that in the financial services space. We are very proud of the fact that we play a part in the whole mobile revolution and the transformation that India as a country went through. Now, we aim to play a part in financial inclusion, expanding financial reach, resources and access to another segment of the population.
JFS’way of doing business is different from traditional banking players. Is it not a new area for IBM?
We have to be very innovative. Some of our learning from the telecom industry is going to hold us in good stead here. For example, in average revenue per user in the telecom space, India is one of the lowest in the world. If you look at JFS’ transactions, the size of these is probably going to be one of the lowest. The number of transactions in this (micro finance) segment are numerous, as in the telecom industry, while the transaction costs are high. But these have to be managed in a very efficient way, with design points that might not have been excercised earlier.
The two segments where IBM is traditionally strong in India are telecom and financial services. Which looks more promising at the moment?
In telecom, you are going to see a whole new wave of transformation and another level of innovation because the scaling proposition of ‘voice’ is gone. Now, it’s all about data. You will see a whole ecosystem around the telecom companies that offer another set of data services, either in a structured or unstructured way. If I look at banks and financial institutions, they can do a lot of work in building insights and improving their analytics capabilities and mobile platforms. We see financial services definitely as a very high growth area.
How has the Indian market evolved for IBM as compared to the earlier period, when the deal sizes were quite larger?
When you think of why deals are getting smaller, it’s because the pace of change is so high that it is becoming more and more difficult for everybody to say this is going to happen for the next five or 10 years. Even for companies like us, who invest $6 billion a year in research, while we can predict trends and innovations that are expected to come, predicting exactly when it will hit a tipping point is harder to do. This is why people are trying to see how quickly they can get to value. It does not mean the business is disappearing but it’s just coming in smaller chunks. And, the pace of change is faster than ever before.
As a company, are you satisfied with the quantity of works you were awarded by one of your largest clients in India, Bharti Airtel, after contract renewal? Industry experts say a significant part of Bharti’s overall IT outsourcing requirements were left out from the contract.
Engagements and contracts are functions of time and what the business is at that point in time. Our relationship and contract with Bharti 10 years earlier was a function of where they were at that point of time, where the market was and where the growth was in front of them. And, the contract today is again a function of where their business aspirations are for the next phase. You can’t take something that was absolutely right for the past decade and just move it over for the next decade. It’s because their business has changed; so also technologies. Lots of opportunities are there, which we will continue to participate in.
Now that India has a stable government. at the Centre, are you seeing this helping boost clients’ sentiments?
I think a lot of the things which were in the status quo and drawing board stage will come to fruition now. The government. has expressed a very clear objective of developing 100 smart cities and we are very excited about it. Again, the government. is talking about infusion of technology. More than anything else, if you have a constant voice which says technology can be a game changer, it’s also having influence on private clients. So. the expectation is that we will see a lot more activity.
