IBM seen controlling half of the Indian IT market by 2010

Source: TheEconomicTimes
IBM, the world’s biggest software services provider, continues to gain more business in the domestic information technology market, and is set to control almost half of the domestic outsourcing market by 2010.

At least two experts tracking India’s $5.6-billion market for software outsourcing said, requesting anonymity, that IBM currently has around 36% share, and is set to control almost half the domestic outsourcing market by 2010.

“In terms of revenues, IBM’s share will be 50-60% already,” the expert helping Indian enterprises plans their IT spend told ET. “In terms of number of contracts, the company should be able to achieve 50% share in a year or two.”

Top Indian software exporters such as TCS, Infosys and Wipro are also attempting to address the lucrative Indian market for services at a time when their key markets, the US and Europe, are seeing a slump.

However, Indian tech firms will find it tough to challenge IBM’s strengths in offering hardware, software, outsourcing and consulting, as an integrated solution to clients.

Apart from mega outsourcing contracts worth anywhere between $500 million and $1 billion from telcos such as Bharti Airtel, Idea Cellular and Vodafone, IBM has been able to remain aggressive when it comes to smaller, but strategic deals from companies like Tata Sky and HPCL.

“We helped Tata Sky differentiate and achieve a competitive positioning by offering innovative services such as prepaid recharge options for subscribers,” said Ponani Gopalakrishnan, vice-president of IBM’s India Software Labs.

Indian companies, like their counterparts in the US and Europe are seeking to bring down their operational costs by 10-30%. Customers such as Tata Sky and HPCL are increasingly turning to IBM for innovative solutions that help them achieve competitive edge.

The HPCL contract worth around $2.2 million, for implementing radio frequency identification device, will help the petroleum company streamline its processes of bottling, supplying and tracking over 500,000 LPG cylinders in the first phase.

Ms Gopalakrishnan who holds over 20 patents granted by the US patent office, along with a few hundred researchers at the lab are solving business problems and helping new businesses such as Tata Sky raise entry barriers for new entrants through innovative solutions.

“We helped Tata Sky integrate its back-end capabilities with IT infrastructure using SOA,” said Ms Gopalakrishnan. SOA, or service-oriented architecture, helps enterprises integrate their business processes, and deliver flexible IT-based services to users. Tata Sky aims to have around eight million subscribers by 2012.

While some of these outsourcing contracts are smaller in size when signed, IBM is able to evolve these engagements into bigger, multi-year contracts.