IBM's India Play

IBM employed 28,000 people in India last year, up from 3,000 in 2002, says Inderpreet Thukral, director of strategy at IBM India. Until now, IBM and other large U.S. consulting companies have pulled that off by attracting the best of India's IT talent while avoiding hiring recent grads. But that's changing.

Growth isn't letting up and IBM has to match Indian outsourcers' costs to stay competitive. "If they want to sustain this pace, they have no choice," says Pratik Kumar, senior VP of human resources at Wipro Technologies.

IBM India's revenue is up 45% from a year ago, and it keeps winning its share of large deals, such as a 10-year, $750 million contract it signed in 2004 with Bharti Tele-Ventures, India's No. 1 telecom company, to manage its data centers and develop new billing, sales, and data-warehousing systems.

Growth in India comes as IBM laid off 13,000 people last year, mostly in Europe. But it's not just about trading high-priced jobs for low-priced ones; Indian operations also help win U.S. business, Thukral says. The company's India presence was a factor in its ability to win a $500 million piece of $7.5 billion in IT contracts that General Motors let last week. "Most companies now expect to see Indian resources as part of the contract," Thukral says.

"It's seductive to compare the growth in Indian Global Services head count and the U.S. reduction," he says. "But think about [India] as an emerging market. ... The key isn't looking at one country as the key to your talent and innovation."

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