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IBM Expects $1 Billion in India Revenue This Year

Business is booming for IBM India, both in local services and offshore support for U.S. and European customers.

December 18, 2007 — IDG News Service (Bangalore Bureau) —

IBM expects to make about US$1 billion in revenue from India this year, as the company's hardware and services businesses in the local market soar.

IBM made $700 million in revenue from India last year, a company spokesman said Monday. In the first three quarters of this year it posted revenue growth of 39 percent over the previous year. "At the current growth rates, we expect revenue of $1 billion for the year," the spokesman said.

Unlike Indian outsourcers, who have mainly focused on more lucrative contracts abroad, multinational services companies like IBM have focused on the growing Indian outsourcing market.

India's contribution to IBM's revenue is higher if the revenue from services delivered to customers in other countries are also included. These are higher than domestic revenue and growing faster, the IBM spokesman said. These revenues are typically included in the financial figures for the country in which the services were contracted, however.

India is a key hub for the global delivery of services by IBM, as the company takes advantage of the country's large pool of skilled labor.

Reports, including in The Wall Street Journal, quoted an IBM official in the U.S. as saying that the company has increased its staff in India to 73,000 this year. The IBM India spokesman was unable to confirm this figure, but he said the company had 53,000 staff in India at the end of last year.

Although IBM does not break down the number of staff it has in offshore software development and services in India, most of the new additions are likely to have been made in its Indian outsourcing operations, with the rest in sales and marketing.

The expansion in India comes even as staff availability there has gotten tighter and salaries are on the increase. India is still attractive to foreign companies to set up software development and services subsidiaries or outsource work, as salaries are still competitive and the talent pool is large, said Siddharth Pai, a partner at outsourcing consultancy firm Technology Partners International Inc (TPI) in Houston, in an interview last month.

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