Keying it right: IBM touches $5-bn mark in India in FY17
BENGALURU: A little over a decade after it captured a landmark outsourcing contract from telecom major Bharti Airtel Ltd, International Business Machines (IBM) has touched $5 billion in revenue in India — making it larger than a bunch of other top homegrown outsourcing firms such as Tech Mahindra.
IBM, the world’s largest technology services company which is popularly referred to as Big Blue, posted robust growth of nearly 41% during the April-March period, driven by strong technology spending in the domestic outsourcing market. According to filings with the Ministry of Corporate Affairs, IBM reported revenues of ₹32,325 crore ($5.01 billion) during the financial year ended March 2017, compared with ₹23,005 crore during the year-ago period.
The latest figures make IBM the biggest technology services firm in the domestic outsourcing market, which is home to IT giants such as Infosys and Tata Consultancy Services. The India businesses of the likes of Infosys, Wipro and TCS pale in comparison to IBM’s India revenue.
IBM did not immediately respond to an email seeking comment.
TCS generated 6.3% of its overall revenue ($1.1 billion) from India in the year ended March 2017, a 8% increase from the yeararound ago period. Infosys pulled in 3.2% of overall sales or $326.7 million in business from India in the year ended March 2017, a 32% increase from the year-ago period.
Wipro does not disclose revenue it generates only from India, but puts out a combined revenue figure from India and the Middle East.
IBM has dominated the domestic outsourcing landscape for the better part of the last one-and-ahalf decades, with multi-year, multi-billion dollar outsourcing contracts from technology customers such as Bharti Airtel Ltd, Vodafone India Ltd and Idea Cellular Ltd (much before the Vodafone-Idea merger happened).
At one point, the size of IBM’s original 10-year contract with Bharti Airtel had swelled to $2.5 billion-$3 billion, or nearly $300 million in annual revenue. The size of that contract has since then shrunk by more than half, as Bharti Airtel reduced its exposure to IBM and also cut back on outsourcing, as part of a strategy revamp.
During the 2000s, IBM replicated the global delivery model perfected by Indian software exporters and built up a workforce consisting of hundreds of thousands of programmers in India who maintained software applications and back-office projects, among other things. At one point, the size of IBM’s India workforce had touched 150,000 -that figure has, however, shrunk in the past five years to about 100,000 as IBM has automated a number of commoditised services, such as software maintenance, according to at least three IBM executives.
IBM does not provide a regionwise breakup of its employees in its financial reports—the employee figures for IBM in India were obtained from company sources, brokerage reports and industry estimates.
To be sure, IBM’s latest revenue figures have been generated not just by domestic outsourcing contracts, but also include overseas outsourcing contracts, which are managed by IBM’s local teams in India -- similar to the way homegrown IT services firms like Infosys and TCS generate a majority of their revenue from clients in North America.