IBM Looks Beyond India To Vietnam And China

Faced with rising salaries and a talent squeeze in India, IBM is searching out new frontiers in its campaign to deliver tech services from countries that are geographically closer to many of its international customers and where skilled workers earn significantly less than their U.S. counterparts.

With that in mind, IBM on Monday announced plans to open new computer services centers in Vietnam and China.

The Vietnamese facility, IBM's first in that country, will be located at the National University in Ho Chi Minh City and offer a range of services to customers in French-speaking areas such as France, Belgium, and parts of Africa.

IBM's new Chinese center will be located in the high-tech zone of Chengdu and will support customers in the U.S., Europe, Australia, and Japan. It will be IBM's fourth application maintenance and development facility in China.

An IBM spokesman declined to say how many employees would be located at the new facilities. "We're not talking numbers right now," said the spokesman.

IBM is looking at expanding its offshore presence beyond India in part because the rapid influx of Western IT companies into the country -- IBM itself now has more than 50,000 Indian employees -- has created wage inflation and a shortage of managerial talent.

India produces 400,000 technically trained graduates a year, but many are deficient in teamwork and language skills, according to a study released last year by consultants at McKinsey & Co. To boot, the Western hiring binge is leading to salary inflation of about 15% per year, according to Indian IT executives.

Faced with such conditions, IBM and other U.S.-based outsourcers are hedging their bets on India by searching out new, low-cost tech hot spots. In addition to China, Russia, Eastern Europe, and Brazil all are attracting significant interest from tech services providers.

IBM also is enlisting industry partners in its globalization campaign. The company said Monday that it would work with Cisco Systems to provide a range of internationally consistent infrastructure support offerings.