IBM's India Plan Includes A Hefty Dose Of Automation

It's doing research to turn many manual IT tasks over to machines in order to push down the operating costs of its services group.

Paul McDougall, Editor At Large, InformationWeek

June 9, 2006

4 Min Read

For IBM, the future isn't just about India. It's also about automation. Beyond pouring nearly $6 billion into India over the next three years, a move the company announced last week, IBM also is looking for ways in which many of the IT services delivered from offshore tech hubs like Bangalore can be carried out by computers to cut costs even further.

Running an IT shop is still a very labor-intensive job, whether a company does it in-house or hires IBM or one of its competitors to do some of it. IBM has a team based in Bangalore trying to change that by finding ways in which common IT management tasks--like ensuring that security software on a server is updated in real time as new threats arise--can be broken down into components and handed off to machines. The upside for IBM: "We'll be able to serve more customers without having to hire another 100,000 workers," says Mahmoud Naghshineh, director of services delivery research at IBM.

That's key for IBM. The company last week left little doubt that India is the new center of gravity for its $47 billion-a-year services business. CEO Sam Palmisano wants to tap the country's highly skilled but lower-paid tech workforce. "IBM isn't going to miss this opportunity," Palmisano said, speaking in Bangalore to an audience that included Indian President A.P.J. Abdul Kalam. IBM employs 43,000 workers in India, up from 23,000 a year ago, and it's on a hiring pace that could easily bring it to 60,000 in another year. It has invested $2 billion in the country the past three years.

But even India, where programmers typically are paid 40% to 80% less than their U.S. counterparts, is becoming more expensive. Tech wages are going up about 15% per year, and the competition for people is intense. Automating operations there will help IBM keep costs in check as it grows. There's a benefit for customers, too. The first step to automation is standardizing activities that make up a task. "When you standardize, quality goes up," Naghshineh says.

Automating Quality
At an IBM service center in Bangalore, researchers are testing automation scenarios. Two major IBM customers from the West, one in financial services and the other a manufacturer, are the guinea pigs. In one project, researchers are applying the kind of automated remote-provisioning methods commonly used to manage PCs to more complex midrange servers. They're seeking ways in which new workflow software from IBM's labs can coordinate the operation of existing software--including IBM's Tivoli line--so it can work as a unit to perform a complex task like database creation.

The Bangalore center also is testing new portal technologies that offshore systems administrators could use to more quickly resolve problems at a client site, such as a network outage. The system will draw on advanced search technologies. "All data will be pulled together based on the problem at hand," Naghshineh says.

These moves aren't without risks. One is that IBM faces a backlash from its U.S. workers that could hurt productivity. "While Sam Palmisano is excited about IBM tripling its investment in India, IBM employees [in the United States] have increased concerns and anxiety that their jobs will be offshored that much quicker," says a spokesman for Alliance@IBM, a group that represents current and former workers. An IBM spokesman says the India investment will have "no impact" on U.S. jobs.

If IBM isn't firing American workers in large numbers, it's not hiring many, either. Its U.S. staff is less than 150,000, around half of the company's employees. Yet the question facing all of its workers isn't only where work might be done, but how much might be done by machines.

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About the Author(s)

Paul McDougall

Editor At Large, InformationWeek

Paul McDougall is a former editor for InformationWeek.

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