India
has been IBM's fastest growing market with 61% increase in
revenues in the first quarter of 2006. The fact that the head
count of IBM in India has increased substantially from 9,000
to 43,000 in just twoandahalf years time reflects the growing
significance of India in IBM's success. Though lowcost destination
is one of the factors for its rapid expansion in India, it
is definitely not at the cost of lowskilled people. Indeed,
IBM's global network strategy is to capture the best people
at the best cost in the right place. Having explored all these
options in India and realizing the growing potential in India,
Palmisano has planned to triple IBM's investment in India
to $6 bn over the next three years.
During
1990s, with the intensifying competition, many of the technologydriven
companies have struggled for mere existence. To gain a competitive
edge and differentiate themselves, few of them have shifted
their focus by offering product or servicecentric packages.
In this backdrop, Louis Gerstner, the then chief executive
of IBM, revived the struggling computer giant by successfully
transforming IBM from being a hardwarecentric enterprise
to a servicecentric enterprise. In a 1999 report, Fortune
had in fact commented: "IBM services now matter more
than its hardware. That's the key to Louis Gerstner's remarkable
turnaround in IBM's future. In 1992, income from services
represented 12% of IBM's revenues; by 2003, it is estimated
that services will represent 46% of revenues. The challenge
facing IBM in moving to a productservicecentric organization
is in managing the transition effectively."
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