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BANGALORE: A decade after IBM put India at the core of its global strategy for software services, by building an army of engineers, the company is shedding staff, scaling down investments and even shuffling the top leadership in the country. Already, from around 1.65 lakh employees on its payroll by 2011, IBM's India headcount has now fallen to around 1.13 lakh and set to slide to 1 lakh by March 2015, according to people familiar with the company's plans.
IBM India managing director Vanitha Narayanan, who relocated from the United States in January last year, is planning to return as part of a major organisational rejig. "IBM is looking to rationalise high cost executives assigned across the markets and bring them back to the US," a source said.
"Such executives cost anywhere between $7,00,00 and over $1 million annually, apart from local country market costs," he added. Another person familiar with the developments added that Narayanan's possible return to the US has "nothing to do with India performance, but a part of global realignment of senior resources."
IBM India said in a statement that it "continues to invest in India" and that it has "more than 3,000 open positions" for jobs in the company. "Narayanan continues to lead India (and) the rumour (about her move to the US) is completely unfounded," according to IBM.
CHEAP LABOUR NO MORE THE 'SILVER BULLET'
As IBM attempts to script another turnaround in over a century of its existence, lowcost software services are no more the silver bullet that helped it come out of "a neardeath experience" in the late nineties. With aggressive disruptors such as Amazon and Google, cloud computing is the new battlefront, threatening models that rely on low-cost labour.
And that explains the shift in IBM's priorities, company insiders said."India is important, but not critical to IBM's survival like the time when Sam Palmisano brought entire board of the company to Bangalore in 2004," said a person familiar with the changes. "Things are looking quite different from 2011 — I now see half-empty floors, paid parking slots and no free coffee at times," said an IBM employee.
Now, software robots from companies such as IPSoft, and IBM's very own Watson, are being applied to automate projects, reducing dependence on engineers and support staff. Already, IBM has an internal project called 'Dynamic Automation' that is aimed at reducing dependency on human engineers by deploying software robots and automation tools. What IBM is doing is not surprising, said Rishikesha Krishnan, director and professor of strategy at Indian Institute of Management-Indore.
"IBM got into plain vanilla services rather late and that has pretty much run its course now. So they have to find a new business model," he said. The trend away from labour-intensive software services is the biggest driver for top MNCs including IBM to be looking elsewhere for talent.
Vinnie Mirchandani, a former Gartner analyst and CEO of boutique advisory firm Deal Architect, said companies such as IBM are looking to build newer talent teams in regions beyond India. "In areas like social marketing, security, mobile app development, IBM and other firms are developing talent pools in newer global regions and so are not as dependent on India," Mirchandani said.
IBM scaling down India business, MD Vanitha Narayanan to return to US - Economic Times
IBM India managing director Vanitha Narayanan, who relocated from the United States in January last year, is planning to return as part of a major organisational rejig. "IBM is looking to rationalise high cost executives assigned across the markets and bring them back to the US," a source said.
"Such executives cost anywhere between $7,00,00 and over $1 million annually, apart from local country market costs," he added. Another person familiar with the developments added that Narayanan's possible return to the US has "nothing to do with India performance, but a part of global realignment of senior resources."
IBM India said in a statement that it "continues to invest in India" and that it has "more than 3,000 open positions" for jobs in the company. "Narayanan continues to lead India (and) the rumour (about her move to the US) is completely unfounded," according to IBM.
CHEAP LABOUR NO MORE THE 'SILVER BULLET'
As IBM attempts to script another turnaround in over a century of its existence, lowcost software services are no more the silver bullet that helped it come out of "a neardeath experience" in the late nineties. With aggressive disruptors such as Amazon and Google, cloud computing is the new battlefront, threatening models that rely on low-cost labour.
And that explains the shift in IBM's priorities, company insiders said."India is important, but not critical to IBM's survival like the time when Sam Palmisano brought entire board of the company to Bangalore in 2004," said a person familiar with the changes. "Things are looking quite different from 2011 — I now see half-empty floors, paid parking slots and no free coffee at times," said an IBM employee.
Now, software robots from companies such as IPSoft, and IBM's very own Watson, are being applied to automate projects, reducing dependence on engineers and support staff. Already, IBM has an internal project called 'Dynamic Automation' that is aimed at reducing dependency on human engineers by deploying software robots and automation tools. What IBM is doing is not surprising, said Rishikesha Krishnan, director and professor of strategy at Indian Institute of Management-Indore.
"IBM got into plain vanilla services rather late and that has pretty much run its course now. So they have to find a new business model," he said. The trend away from labour-intensive software services is the biggest driver for top MNCs including IBM to be looking elsewhere for talent.
Vinnie Mirchandani, a former Gartner analyst and CEO of boutique advisory firm Deal Architect, said companies such as IBM are looking to build newer talent teams in regions beyond India. "In areas like social marketing, security, mobile app development, IBM and other firms are developing talent pools in newer global regions and so are not as dependent on India," Mirchandani said.
IBM scaling down India business, MD Vanitha Narayanan to return to US - Economic Times
IBM is unlikely to recover anymore. They have been gradually winding up. Only one division is still here - for R&D or Accounts purpose...can't remember. 
There are other two companies who have also filled the void, can you give you details in a few days. Got friends and all. 
