It was a cross between a U.S. Presidential visit and a rock concert. IBM's (IBM) first-ever analyst meeting outside the U.S. was held on June 6 at the Bangalore Palace grounds, a large open area for public events situated in the heart of India's Silicon Valley, amid tight security and much hoopla.
A large blue air-conditioned tent housed close to 11,000 people -- 10,000 of whom were IBM's Bangalore employees, and the rest IBM senior management and analysts from across the world. The entire event was webcast to the company's 330,000 employees worldwide. Inside, New Age Indian guru music blared, big screens flashed global IBM ads, and dancers from across India performed on stages scattered around the enclosure. Armies of public relations agents fussed about. In all, it took some 1,500 people to put on this mammoth event (see BW Online, 06/05/06, "Big Blue Shift).
At exactly 10:15 a.m., as a giant clock on the screen counted down to zero hour, the crowd roared and IBM Chief Executive Sam Palmisano walked onto the main stage accompanied by Indian President A.P.J. Kalam, other local dignitaries, and Sunil Mittal, the chief of India's largest cellular operator, which has outsourced its back-end operations to IBM India.
GIANT INVESTMENT. Palmisano got enthusiastic cheers and applause from his local staff when he talked about how important IBM's 43,000 employees in India are to the company's growth. That large workforce makes IBM the biggest tech player in India. "I am here really to say ‘thank you' for all your hard work in getting us to the No. 1 position," he said.
Then he announced that the company would be investing $6 billion in India over the next three years, on everything from research to innovative delivery models and education. That's the largest single investment by any multinational tech company in India, and much more than the $2 billion IBM has spent in India in the past three years (see BW Online, 05/05/06, "IBM Wakes Up to India's Skills"). And IBM is now the multinational with the largest number of employees in India.
But the loudest hurrahs were reserved for President Kalam, who, as the rocket scientist who gave India its nuclear bomb, is the god of all Indian techies. His presentation made a polite reference to "my friend Sam" and to IBM's responsibility to help India carry out research and development on technologies that can help the masses, but was mostly an ode to India's defense capabilities. That brought ever louder cheers from the audience -- clearly, Palmisano would lose to Kalam hands down in a popularity poll.
TECH TAJ MAHALS. That's why IBM had to make its presence felt with a splashy show. Palmisano's visit to India is proof of how important the country has become to IBM's future. Already the country is home to the second-largest contingent of IBM employees outside the U.S. Yet, while IBM India pays about 20% more than rivals to attract employees, the competition to lure and retain top talent is heating up.
That’s one big reason Apple Computer (AAPL) recently decided to shelve plans to build a sprawling technical and customer-support center in Bangalore (see BW Online, 06/05/06, "Apple Follows Its Instincts Out of India"). Although the company did not cite particulars, sources familiar with the situation say the decision was largely cost-driven. "India isn't as inexpensive as it used to be," the source said. "The turnover is high, and the competition for good people is strong." Apple feels it "can do it more efficiently elsewhere."
Indeed, tech multinationals are somewhat at a disadvantage when it comes to hiring in India. There are several reasons: First, Indian tech companies like Infosys (INFY), Wipro (WIT) and TCS have the strongest brand names in the industry and attract the best brains. They have sprawling campuses complete with swimming pools, tennis courts, cafés, and stores. If they were public monuments, they'd compete with the Taj Mahal for number of visitors. IBM's local facilities offer no such luxuries, and neither do those of American rivals like Accenture (ACN) and Electronic Data Systems (EDS).
Second, the Indian companies are still the leaders in the outsourced global delivery model, where Big Blue and its rivals are far behind. True, Infosys and Wipro are mere $2 billion companies, and TCS is $3 billion. That's a far cry from IBM's $91 billion business, of which $47 billion comes from services. Third, techies say Indian firms offer greater opportunity for advancement than Yankee multinationals like IBM, Accenture, and EDS -- an impression Palmisano seemed eager to counter. "Your career opportunities in IBM are limitless," he told employees gathered at the Bangalore meeting.
BOLLYWOOD EMCEE. Palmisano will have to make good on that pledge if he wants IBM to get ahead in the game. Sure, the company has done a far better job than its rivals in integrating its core operations with its new, outsourced business, and is shipping a considerable amount of work to India. "On the outsourcing curve, IBM is ahead of its foreign peers in the global delivery model," said an investor from a large U.S. fund. However competitors are closing in. EDS recently acquired Indian outsourcer MphasiS, which could help it come up from behind in tech services, while Accenture has made inroads into the high end of the consulting business in India.
Palmisano will no doubt take home some wonderful memories from his India trip: the roar of appreciation he got from thousands of his young employees, the gardens of Bangalore in full monsoon bloom, the charms of Bollywood actress Dia Mirza who emceed the event in a red sari. IBM's boss certainly seems to have the goodwill of his Indian employees for now. The challenge will be to parlay that into building IBM's reputation in India as a great place to work.
Printer-Friendly Version