IBM plans to continue hiring
global services delivery staff in India by the thousands, adding to the 73,000
it already has in its global services and other operations in the country.
A large number of Indian outsourcers and multinational services companies have
set up services delivery operations from India. Their competition for the best
staff is driving up salaries. Companies are however introducing quality systems
that enable them to weed out low performers. IBM, for example, sacked about
200 staff earlier this month, after a staff appraisal. Indian outsourcer Tata
Consultancy Services said a day later it had terminated 500 staff after a similar
staff appraisal.
Staff attrition in IBM's global services delivery operation in India is within
0.2 percent from the attrition rate at IBM's global services operations in the
U.S., said Diane Gherson, vice president of human resources (HR) for IBM's Global
Business Services.
"Our business model is based on that range of attrition, and we don't
mind some attrition because it helps us get fresh talent, and offer growth to
people in the organization," she said Wednesday.
Although staff salaries are rising in India higher than in most other countries,
IBM has been able to recover the increased cost from clients by offering staff
with higher skills, Gherson said. Salary increases will however eventually become
a problem for India if the amount staff are charging cannot be recovered from
clients, she added.
Even as some research firms have warned of reduced growth in IT budgets in
the U.S. this year, IBM is not feeling the impact yet in its services business.
"They will talk themselves into a recession if they are not careful,"
Gherson said. Besides, over 65 per cent of IBM's revenue comes from outside
the U.S., she added.
Forrester, for example, forecast on Monday slowing growth this year for purchases
of IT products and services in the U.S., based on the assumption that a mild
recession will hit the U.S. economy in the second or third quarter.
IBM's services delivery strategy has been to set up delivery operations in
a large number of countries to tap talent in these countries, and also to deliver
to the customer a variety of skills and services, including language skills,
and services delivered in the same time zone as the customer, said Rajesh Nambiar,
Head of IBM's global delivery business in India.
India is IBM's second largest location outside the U.S. for global services
delivery, and will likely hold this position at least for the next five years,
Gherson said. India is also an important market for IBM, Nambiar said. The company
earned revenue of about US$1 billion from the Indian market last year.
