Big Blue consulting
Yes, IBM stands for International Business Machines, but these days Big Blue goes well beyond computer manufacturing. IBM Global Services, which provides business and IT consulting, has become an increasingly important factor in its parent's bottom line. In 2008, IBM Global Services contributed 57.3 percent of IBM's total yearly revenue of US$103.6 billion.
IBM's first foray into IT services was in 1989, when the company signed a deal with Eastman Kodak to design, build and manage a state-of-the-art data center at Kodak headquarters in New York. Around the same time, IBM began offering business recovery services to its hardware and software clients.
In 2002, IBM solidified its reputation as a consulting provider, and not just a software/hardware firm, when it acquired PricewaterhouseCoopers Consulting. The deal added 30,000 employees in 52 countries to IBM's consulting teams. That same year, Samuel Palmisano, then-chairman and CEO of IBM Global Services, stepped up to become IBM's global CEO, pledging to keep his former division strong. In 2005, IBM sold off its PC businessâ€”further proof that the sum of Big Blue is greater than its computer parts.
Infrastructure and professional services
Today, IBM's Global Services solutions typically revolve around consulting services, IT infrastructure and software. Within IBM Global Services, there are two separate segments: Global Technology Services (GTS) and Global Business Services (GBS). The former works primarily in infrastructure, relying on IBM's global scale, standardization and automation. This unit provides outsourcing services, integrated technology services and maintenance. GBS, meanwhile, is the professional services arm of the company, offering consulting, application management services and systems integration. According to company literature, GBS is "the world's largest consulting organization." As of 2008, there were more than 100,000 GBS employees across the world.
Meanwhile, GBS clients include more than 90 percent of the communications, retail and electronic companies in the Fortune 500 and more than half of all Fortune 1000 companies. GBS serves a litany of industries, including automotive, aerospace and defense, banking, chemicals and petroleum, consumer products, education, electronics, energy and utilities, financial markets, government, healthcare, insurance, life sciences, media and entertainment, retail, telecommunications, and travel and transportation.
Huge in Asia Pacific
In all its divisions worldwide, IBM has over 398,000 employees; of those, approximately 30 percent are based in the Asia Pacific region. At the close of fiscal 2008, the firm's non-U.S. operations generated approximately 65 percent of total revenue, with about 20 percent coming from Asia Pacific operations. Among all of IBM's regional groupings, the Asia Pacific region has shown the strongest revenue growth over the past few years, bringing in US$19.5 billion in 2008, an 8.3 percent increase over 2007. India had the fastest revenue growth for the firm in the Asia Pacific region in 2008, with total take increasing by 25.8 percent. Japan, meanwhile, contributed 49 percent of total Asia Pacific revenue for 2008, and grew by 8.5 percent for the year.
In 2008, revenue from the GTS segment totaled US$39.2 billion, an 8.8 percent increase from the previous year. According to the company, the growth was driven by a number of factors, including structural flexibility, higher value offerings and lower labor costs. Meanwhile, earnings for the GBS segment also rose significantly, also up 8.8 percent from 2007 to US$19.6 billion. IBM attributes this boost to resource optimization, effective balancing of domestic, global and subcontracted resources, deal selectivity, stable pricing, and ongoing operational efficiencies.
India is IBM's second-largest area of operations, just after the United States. With offices in 14 cities, IBM employs about 100,000 people across the country, and has plans to further expand. In 2006, CEO Samuel Palmisano flew to India and informed employees there that he planned to spend almost US$6 billion on Indian business investment by mid-2009. On his to-do list: more technology research labs, more service delivery centers, and more programs to train and develop a local workforce.
IBM commenced operations in India way back in 1951, although the firm later left the market in the 1970s, only to re-enter in 1992 courtesy of a joint venture with the Tata Group. Tata Information Systems Limited, as the entity was initially known, became Tata IBM Ltd. in 1997. That was the same year that IBM launched its Global Services division; the firm also opened a solution partnership center in Bangalore to help Indian software vendors port their applications onto IBM hardware platforms. In 1999, IBM India came under the global IBM umbrella as the firm bought Tata's stake in the venture. Today, IBM India is headquartered in Bangalore, with other major offices in Kolkata, Chennai, New Delhi and Mumbai.
Local talent, international deals
Since setting up shop in Hong Kong in 1957, IBM has had a hand in the growth of the booming metropolis. A major supporter of local technology development initiativesâ€”and a major provider of products and services to Hong Kong's government and public companiesâ€”IBM also teamed with the University of Hong Kong to open the E-Business Technology Institute in 1999. The institute serves as a hub for cross-disciplinary research in e-business applications and development in Hong Kong and mainland China. Like the CRL, it's also become a training ground for local IT developers and potential consultants.
The firm's Hong Kong office is part of its Greater China network, which includes operations in mainland China and Taiwan. In 2008, IBM operated more than 30 offices across the Greater China region and employed close to 20,000 staff, including approximately 2,000 GBS employees. Headquartered in Beijing, operations include four global delivery centers in mainland China, six offices in Taiwan, four joint ventures and six wholly-owned subsidiaries. GBS has been keeping busy in the regionâ€”recently, the division inked a deal with the government of Guangzhou, a sprawling urban city in southern China, to help build a coding and classification system as part of a RMB 12 billion modernization of the city's subway system.
IBM GLOBAL SERVICES:
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