Now into its fourteenth Indian summer, International Business Machines Corp (IBM) has grown rapidly in India—faster on several counts than any other multinational tech company here. From 9,400 employees in December 2003, IBM India crossed 43,000 people this June. That five-fold increase slots the American tech and consulting giant as India’s top MNC employer.

It’s not that there is no competition from the Indian technology companies to IBM’s hiring spree, which started in 1992. Infosys Technologies’ headcount crossed 50,000 this year, while earlier this year, TCS announced plans to add 30,500 people in 2006-2007 alone. The difference, it seems, is that IBM staged its coup off those three uniquely Indian characteristics: Ambiguity, complexity and multitasking.

“For people used to very simple companies, IBM is a very different place. We do so much that all Indian IT and services companies can aptly be called the competition!” says Shanker Annaswamy, managing director, IBM India. “Of course, we do have a lot more on our plate than companies anywhere in the world, not just the firms in India today.”

That plateful includes life-science research, grid computing, chip design, software, computer hardware, e-governance, business consulting, remote infrastructure management and business transformation outsourcing. It even makes the chips that run PC games (such as those sold by Nintendo, Sony and Microsoft sell). And in all these fields, the 43,000 employees in India have at least some role to play.

Growth Spurt

“ALL the strengths of IBM Corp are present in India,” says Annaswamy. “Not least of which is our strength in being a Western company, and in being perceived as such. It gives us greater access to customers, and before others, because the comfort factor is clearly in our favour.”

Besides, the numbers favour IBM like nothing else. In June 2006, IBM’s Chairman and CEO Sam Palmisano addressed 10,000 employees in Bangalore over videoconference, in an effort to demonstrate the company’s commitment to India. “If you are not here in India, making the right investments and finding and developing the best employees and business partners,” Palmisano said at the conference, “then you won’t be able to combine the skills and expertise here with skills and expertise from around the world, in ways that can help our clients be successful.”

Success is crucial to Palmisano and IBM, but not just because there is big money to be made in India in the high-tech or the domestic business. More importantly, IBM has decided it is not going to “miss the Indian opportunity” because of the tremendous growth rates it has been seeing here.

Back in the United States, where IBM is headquartered and churns out its long-term strategy, the verdict for biggest growth in the future has been spelled out as resting on only four economies: Brazil, Russia, India and China, the BRIC countries. Of these four, India has been growing the fastest, at 45 per cent year-on-year in 2004 and now at 55 per cent year-on-year, in 2005.

In June, Palmisano pledged to triple investments in India over the next three years-from $2 billion since 2003 to nearly $6 billion by 2009. This investment, ask any IBM employee, is “absolutely necessary”. “Yes. It (the investments and massive presence in India) enables IBM to fulfill its vision to become a globally integrated company,” says Annaswamy.

Though the size of the business available to tap in India may not be the biggest when you compare it with the rest of the world, what interests IBM Corp is “the rate of growth,” he adds.

Managing Mantra

TO get an idea of the scale and ambition IBM brings to India, check this: The most crucial turning point for IBM in India came 12 years after the local launch of its PC business, in April 2004. That month, IBM announced that it had bought out Indian BPO unit Daksh e-Services (for anything between $130 million and $180 million, according to industry estimates). At the time, IBM was a $90 billion-revenue firm, while homegrown Infosys was clambering up to its $1 billion revenue mark.

But just before it bagged Daksh, IBM had already struck a deal with Sprint, a US-based company that was one of Daksh’s two biggest breadwinners. In a way that Indian companies could not then imagine, IBM had captured not only the rights to support all of Sprint’s customer service processes, but also run its call centres: The one headquartered in the US, of course, but also the one in India.

Though the acquisition added banking, insurance, retail, hi-tech, telecommunications and travel to IBM India’s existing capabilities, Daksh’s centres in Indian and South East Asia weren’t the only things on IBM’s mind during the takeover. But the deal also became a test case that HR managers in India often use to demonstrate how companies ought to “manage people’’ after completing a mega-acquisition across borders.

“The business strength of India that companies like IBM have managed best is people,” says Vijay Iyer, founder, Mentor Consulting, an HR consultancy practice. “People, after all, are the single biggest resource we have.”

IBM has things to teach Indian companies too, experts say, particularly since India is expected to yield a larger number of highly successful firms even as the first generation of Infosys, TCS and Wipro mature further.

According to Hema Ravichandar, who now runs a strategic HR advisory firm after managing human resources for Infosys, “The success of large Indian organisations is that they have realised the reality of middle management paucity in the sunrise industries. They have set in place several interventions to address this, and they have also successfully structured themselves to play to the strengths of Indian professionals.”

Future Flavour

EVEN as IBM leapt from strength to strength in India—a success attributed in part to the buoyancy displayed by all BRIC economies over the last two decades—within months of the Daksh acquisition, IBM bagged a mega-contract from one of India’s most high-profile telecom companies, Bharti Airtel.

The cellular service provider has outsourced a major chunk of its work to IBM as part of a $750 million 10-year ‘strategic outsourcing’ contract signed in 2004. This deal involves complete “transformation and management” of Bharti’s IT infrastructure by IBM. The contract was extended recently for a year with another $100 million.

“Our partnership with IBM marks the coming together of two industry leaders who now provide higher value to end-users. It has always been our aim to be a step ahead of customer expectation and this alliance will further help us achieve this objective and consolidate our leadership position,” says Manoj Kohli, president, Bharti Airtel.

The only target now left for IBM is to have a say in the future of India’s technology. “We support open standards (geekspeak for all technologies that can integrate with each other),” says Annaswamy, “and we believe that open standards are the future for India and need to be adopted in the rest of the world. We firmly believe in open source and open standards when we work with governments.”

In August 2005, the company announced a new initiative that will help start-ups in its four high-growth economies develop solutions on open standards more quickly and easily. The company has now set up an Open Source Software Research Centre in Mumbai that spreads awareness about open standards, and is also working with the Government of India’s Centre for Development of Advanced Computing and IIT (Mumbai).

IBM PRESENT IN INDIA SINCE 1992

* IBM India has seen double-digit growth over the last six years. Recorded revenue growth of 55% year on year and of 61% in Q1.

* IBM is working with over 200 ISVs and 2,500 business partners in India. Company is working with over 40% of India’s developers

* IBM has established over 25 centres in India.

* Research lab in Delhi is one of the eight IBM research labs in the world

* Global Services Delivery Center (GSDC) in Bangalore, Hyderabad and Chennai: IBM launched a first-of-its-kind in Bangalore,India, investing US$ 10 million in 2004-05 and significantly expanding its operations to meet the growing market demand for strategic outsourcing and Infrastructure Management Services

Over 43,000 employees in India

* 4th largest IT employer

* Largest employer as a MNC

Over 1900 of the country’s best technology professionals are engaged in cutting edge technology work at IBM's India Software Lab and India Research Lab

THE BENCHMARKS

* IBM India invested US$ 1.5 Million in the Academia initiatives over 2004 and 2005. This programme, which helps to build talent and skills in the country, reaches out to over 75,000 students across 340 institutes in India to impart training in IBM and open standards based technologies

* IBM has invested approximately $2 billion in India in the past three years and will invest $6 billion in the next three years. There are several important areas where IBM will increase investment and the capabilities in India

* Will launch the "The Great Mind Challenge", which is designed to improve the software development skills of Indian students.

BUSINESS PARTNERS IN INDIA: i-flex, TCS, Wipro, Infosys, Techpacific, Redingtton