IBM poses headache to desi IT bigwigs

While Tata Consultancy Services and Infosys Technologies have won over US companies with cheaper labor and low capital costs, IBM snapped up contracts with some of India’s largest companies, such as wireless carrier Bharti Airtel. 
The strategy will yield dividends for IBM over time as India’s economy thrives, Kaufman Bros.’s Karl Keirstead said. 
“They’ve beaten their competition relatively handily,” said the New York-based analyst, who pointed to IBM’s brand name and experience as draws for potential clients. “There’s a cachet in using IBM.” 

IBM has hired more than 70,000 employees in India, taking advantage of the “hyper-growth” there by helping domestic companies develop infrastructure, said Sandip Patel, managing partner for services in the country. IBM also may attract new customers from India’s Satyam Computer Services, embroiled in the nation’s largest accounting scandal. 
India is slowly transforming from a back office -- a place where companies send work to cut costs -- to a coveted domestic market with fast-growing companies, Patel said. The services market is worth almost $5 billion, according to research firm Gartner Inc. 

India’s economy will grow 5.3 percent in the year starting April 1, the International Monetary Fund said in March. The US economy will shrink 2.6 percent this year, IMF projects. IBM’s sales from India increased more than from any other country in the past three years. 

Building infrastructure 
IBM snapped up contracts from Bharti, India’s largest mobile-phone operator, and Kotak Mahindra Bank, the former partner of Goldman Sachs Groups in India. IBM is helping emerging markets develop, as opposed to just focusing on cost cuts, said Edward Jones & Co. analyst Andy Miedler. 

“They’re focusing on how they can help emerging governments become the big governments of tomorrow,” he said. “One of the key ways you can do that is build the computing infrastructure.”