IBM Tops India's Outsourcing Market

IBM (NYSE: IBM)'s efforts to expand its footprint in developing markets appear to be paying off, as new figures show the company holds the largest share of India's burgeoning domestic IT services market.

Contract wins from large Indian enterprises such as Hindustan Petroleum, North Delhi Power, and IDEA Cellular helped IBM capture 10.8% of India's local outsourcing market in 2008, IBM said Tuesday, citing data from Springboard Research.

IBM services customers on the subcontinent also include Bharti Retail, Religare Enterprises, and Kotak Mahindra bank. "Springboard's assessment of our leadership in India underscores the success of IBM's strategic focus on growth markets," said IBM India managing director Shanker Annaswamy, in a statement.

IBM has been hiring workers in India by the tens of thousands in recent years, and its total head count in the country now exceeds 60,000. While most of those workers are focused on IT projects outsourced from the United States, an increasing number are being tasked with servicing IBM's growing roster of Indian customers.

"Every client -- big or small -- wants to optimize their IT investments, innovate, become more operationally efficient, and mitigate risk," said Annaswamy.

In capturing the lion's share of India's tech services market, IBM has outpaced indigenous competition from firms such as Wipro, Infosys, TCS, and Satyam. Going forward, the company may benefit from an accounting scandal at Satyam that, in the eyes of some observers, has tainted the homegrown industry.

On Jan. 7, Satyam chairman Ramalinga Raju admitted falsifying the company's cash position by as much as $1 billion while overstating quarterly earnings and revenue by up to 28%. Satyam may also have falsified employee numbers and other data. Raju tendered his resignation and has since been arrested and jailed.

IBM's aggressive expansion in India has drawn criticism from U.S. workers faced with job losses. IBM has laid off more than 5,000 U.S.-based workers since the beginning of the year, according to labor group Alliance@IBM. IBM hasn't confirmed the numbers.

Still, IBM shows no signs of slowing its investments in India. The company works with more than 2,200 customers in the country, across numerous industries. IBM said Indian businesses have signaled strong demand for a range of services, including green IT consulting, risk mitigation, and business transformation.

As U.S. sales slow, IBM is investing heavily in developing markets beyond India, including South America and Eastern Europe.