Why IBM Stands for India Beijing Machines - InformationWeek
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11/14/2006
03:34 PM
Paul McDougall
Paul McDougall
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Why IBM Stands for India Beijing Machines

If there were any doubts left about IBM no longer considering itself a U.S. company that operates internationally, but rather an international company that happens to operate in the U.S., those doubts should have been erased over the past couple of weeks.

If there were any doubts left about IBM no longer considering itself a U.S. company that operates internationally, but rather an international company that happens to operate in the U.S., those doubts should have been erased over the past couple of weeks.November's not yet half over, but already the month has seen a flurry of announcements from IBM with more international flair than the cafeteria at the UN. Specifically, IBM is focused like a laser on Asia. Based on news out of IBM this month and in recent quarters, it's not far fetched to speculate that in several years the company's combined presence across India and China will dwarf its American operations.

Last week, IBM disclosed plans to set up a new software development lab in the Indian city of Pune and help boost tech education in the area. The move is part of IBM's plan to invest a total $6 billion on the sub-continent over the next two years. Indeed, IBM's India strategy appears to be one of overwhelming force.

In creating a workforce in the country that will top 50,000 by next year, IBM is making it awfully tough for Western rivals like EDS and CSC to build out their own Indian operations. There's only so much IT talent to go around--even in a nation of one billion.

It could be a sound strategy: As one Wall Street analyst told me recently, if you can't sell IT services at offshore prices these days, you can't sell IT services period. Why do you think EDS recently decided to up its stake in Mphasis?

But now that CEO Sam Palmisano has his India blueprints fully drawn up, he's turning his attention to China. That's the next big source of employees and customers for Big Blue. In the past couple of weeks, IBM has said it would partner with Lehman Brothers to launch a $180 million China investment fund, open new software labs in Beijing, and partner with Chinese universities to create curricula focused on tech services delivery.

And on Tuesday, Palmisano unveiled the company's big innovation push for the coming year while in Beijing, leaving little doubt about China's centrality to IBM strategic plans.

All of this might not be great news for IBM's U.S. employees--check out the griping over at AllianceIBM.org. Many of the company's American workers are worried about their jobs, and probably with good reason.

But the computing giant's corporate customers, especially the really big ones, will no doubt welcome these moves. The entire Fortune 500 is as anxious as IBM is to tap Asia's red hot markets. If you're GM and you're thinking of building a hi-tech plant in, say, Guangzhou, the thought of handing off IT support for that plant to IBM rather than some unknown local firm must be comforting.

But the question remains: Is IBM still an American company? Does the question even matter anymore?

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