Summer Training Project Report

On
Marketing Strategies of IBM Global Service

Submitted in partial fulfillment of the requirements

for the award of the degree of
Bachelor of commerce (Hons) programme
Submitted By:
Sarthak Tikoo
B COM (H) 5th Sem
Roll No.: 03396788813
Batch (2013-2016)
External Guide:

Internal Guide:

Mr.

Ms. Anshika Singh

Kamal Institute of Higher Education and Advance Technology

K-1 Extension, Mohan Garden, New Delhi 110059
(Affiliated to GGSIPU, Delhi)

STUDENT DECLARATION

I hereby declare that the project entitled Marketing Strategies of IBM Global Service under
the guidance of Ms Anshika Singh submitted in the partial fulfillment of degree of Bachelor
of Commerce (hons) 5th semester from KAMAL INSTITUTE OF HIGHER EDUCATION
AND ADVANCE TECHNOLOGY NAWADA , NEW DELHI. This is my original work and
this project work has not formed the basis for the reward of any Degree to the best of my
knowledge.

SARTHAK TIKOO
03396788813
Place: New Delhi
Date:

CERTIFICATE BY THE GUIDE

This is to certify that project title MARKETING STRATEGIES OF IBM GLOBAL

SERVICES is the original work of SARTHAK TIKOO
(03396788813) student of BCOM (H) 5th semester and has been duly completed his project
under my guidance and supervision up to my satisfactory level.
This work has been done in partial fulfillment of the requirement for the award of the degree of
Bachelor of Commerce

from Kamal Institute Of Higher Education And Advance

Technology, GGSIPU and has not been submitted anywhere in any other university for the
award of any degree.

Ms. Anshika Singh

Asst. Professor
KIHEAT

ACKNOWLEDGEMENT

It is pleasure to acknowledge many people who knowingly and unwittingly helped me, to
complete my project. First of all let me praise god for all the blessing, who carried me through all
those years. I am particularly indebted to Director Dr. J S GUJRAL, KAMAL INSTITUTE
OF HIGHER EDUCATION AND ADVANCE TECHNOLOGY, which inculcated in me
utmost request for human values and groomed me up in the field of software technology to take
on the challenges of the competitive world. First and foremost, I would like to express my
regards to MS. ANSHIKA for her constant encouragement and support. I would also like to
express my immense gratitude towards all the lectures of our college for providing the invaluable
knowledge, guidance, encouragement extended during the completion of this project.

I extend my sincere gratitude to all my teachers and guide who made unforgettable contribution.
Due to their sincere efforts I was able to excel in the work entrusted upon me.

SARTHAK TIKOO
03396788813

Executive Summary

IBM India's revenue is up 45% from a year ago, largely contributable to a strategic approach and
highly penetrative marketing strategy, and it keeps winning its share of large deals, such as a 10year, $750 million contract it signed in 2004 with Bharti Tele-Ventures, India's No. 1 telecom
company, to manage its data centers and develop new billing, sales, and data-warehousing
systems. But it's not just about trading high-priced jobs for low-priced ones; Indian operations
also help win U.S. business. The IBM Global service India's India presence was a factor in its
ability to win a $500 million piece of $7.5 billion in IT contracts that General Motors let. It's
seductive to compare the growth in Indian Global Services head count and the U.S. reduction for
the economists. But think all economic experts believe India as an emerging market.

The present study has been carried out with the objectives of studying the marketing strategies
currently adopted by IBM global services India private limited and to critically analyze the
marketing strategy in this highly competitive Indian scenario and also its competitive product
portfolio. The study has been carried out using both the primary as well as the secondary sources
of information.

I dont hesitate to conclude that maintaining high quality standards, innovative approach, highly
skilled labor forces, etc. are the key factors which make this organization a huge success rate,
among other competitors in the Indian market.

TABLE OF CONTENTS
S.No.

Topics

Page No.

Chapter 1 INTRODUCTION

1 28

Industry Profile

16

Company Profile

7 28

Chapter 2 RESEARCH METHODOLOGY

29 31

Research Methodology

29

Objectives of the Study

30

Scope of the Study

31

Chapter 3 DATA ANALYSIS & FINDINGS

32 41

Data Analysis and Interpretation

32 38

10

Findings of the Study

11

SWOT Analysis

40 41

12

Chapter 4 CONCLUSION

42 48

13

Conclusion

42

14

Limitations of the Study

43

15

Recommendations

16

BIBLIOGRAPHY

17

ANNEXURE

18

Questionnaire

39

44 48

Chapter: 1
Introduction

INDUSTRY PROFILE

MARKETING STRATEGY OF SOFTWARE COMPANIES IN INDIA

SOFTWARE

INDUSTRY

IN

INDIA-

Software is usually classified by type of use and by customization.

Types of software by usage:
System-level software: programs that manage the internal operations of the computer, such as
operating system software, driver software, virus scan software and utilities.
Tools software: programs that help applications to work better, such as database management
software.
Applications: programs that deliver solutions to the end-user, such as word processing
software and financial accounting software.

The implantation of a technically sophisticated industry like software into a less developed host
country has typically been explained by the access of transnational corporations to local
resources facilitated by policy reform (often after efforts to create industry through protectionist
policies have failed). For example, Dunning(1992) argues that reform effectively enables cheap
labor pools and other host country resources to be matched with the financial, managerial,
technical, domain and marketing skills of TNCs.

In recent years, India has made good progress in the export of information technology (IT)
software and services. Many other countries now look to it as a model. At the same time, Indias
concentration of low value-added services, the near-absence of technology development, and the
total absence of hardware development suggest that IT exports are not fulfilling their potential,
either in terms of innovative content or of possible sustainability. The Indian government has set
aggressive targets for the high technology industry, including an annual export growth rate of 33
percent for the next decade, compared with 50 percent over the past five years. These goals will
translate to substantial dollar increases in software and IT services exportsfrom $3 billion in
1998 to $50 billion in 2008.
The growth of the industry, which happened in the mid-1980s, was preceded by a paradigmatic
shift in government policy from hostility to the private sector to support for it; and maturation

was also critically enabled by the modularization of the programming function through the
establishment of Unix and the workstation in the 1980s. We showed how this led to a focus on
custom programming services located in Bangalore. In the process, the industry acquired skills in
managing projects remotely. Other weaknesses, particularly the shortage of domain skills and
difficulties with coordinating cross-border projects, persisted. While policy reform has put in
place several of the conditions for future growth, the shortage of domain skills arising from small
domestic markets, limited university research and interactions with the commercial sector
remains. Some of these skills are being acquired through cross-border interactions and alliances.
This, in consequence, means that established domestic firms now compete with TNCs and
startups with overseas links that have superior domain skills. As a result, while the large
domestic firms leadership of the software industry is increasingly being shared with TNCs and
startups, the acquisition of domain skills is likely to result in benefits for the industry as a whole,
implying higher value-addition.
Adoption of new liberal policies in India has given birth immense opportunities to its industries.
Success story of India's Software Industry is a step in the same direction. The Software Industry,
which is a main component of the Information technology, has brought tremendous success for
the emerging economy. India's young aged manpower is the key behind this success story.
Presently there are more than 500 software firms in the country. According to statistics, country's
software exports reached total revenues of Rs 46100 crores. The share of total Indian exports
form 4.9 per cent in 1997 to 20.4 percent in 2002-03. It is expected that the industry will
generate a total employment of around four millions peoples, which accounts for 7 per cent of
India's total GDP as in the year 2008. The year 1995-96 was a boom for the industry. The
performance
of
the
industry
over
the
years
is
as
follows:
(IN TERMS OF US $ MILLIONS)
199596

199697

199798

199899

19992000

200001*

490

670

920

1250

1700

2450

Software Exports

734

1085

1750

2650

4000

6300

Indian
Industry

1224

1755

2670

3900

5700

8750

Domestic
Market

software

Software

(* Source: NASSCOM)

The value proposition of the Indian software industry can be summed up as "faster, better, and
cheaper." The Indian companies have taken responsibility on an end-to-end basis for new
software development and for re-engineering. Indian software companies have also been very
proactive in accepting, embracing, and practising state of the art methodologies and processes; in
investing heavily in tools, technology, and infrastructure; in reducing time to market as well as
cost; and in improving quality, productivity, and response time. In the new paradigm, the Indian
software industries have brought tremendous value in the area of e-commerce. Nobody can be a
significant player unless they understand and embrace the depth of distance and the "anytime,
anywhere" paradigm that's brought to the table by e-commerce. Indian companies have of course
embraced it in a big way and have helped corporations all over the world derive benefits from
this paradigm. My own company derived about 18.8 per cent of its revenues last quarter from ecommerce.

ECONOMIC RATIONALE

As more multinationals open development centers in India, it will become harder for the Indian
companies to retain people. Multinationals can always afford to pay better, not because of their
financial muscle, but because of the nature of the relationship between the parent company and
its center here. For illustration purposes, let us consider a company in USA which does software
development for itself. Say, it costs the company $7000/- per person month in USA. If it opens
a development center in India, and spends $4000 per person month, it still saves $3000 per
person month. On the other hand, an Indian software company developing software for clients,
even if it charges $4000/- per person month, it cannot spend the entire amount as it must also
make a profit in this $4000 rate. That is, given a rate in India, the multinational makes a profit
even if it spends the entire rate amount on the Indian center. On the other hand, the Indian
company can spend only about 60-70% of this on the center (assuming a profit margin of 3040%). Clearly, if salary wars really start, Indian companies will find it hard to win against
multinationals. However, this economic logic can be inverted and used by Indian companies to
increase their profitability and strength by going multinational. The idea is as follows. An Indian
company starts a full fledged software development center in the USA, manned by people from
USA (and India). As a US company, this company charges US rates. However, it ?subcontracts? parts of its work to its parent company in India, making double profits on these parts
(the US company makes a profit as well as the Indian company makes a profit). The relationship
between the Indian company & its subsidiary is just reverse of the relationship a typical
multinational has with its subsidiary in India. With multinationals, they provide work to their
center, while in the case of Indian companies, it is their overseas center that will provide work to
them. Note also this concept is different from setting up centers in other Asean countries to meet

10

the manpower needs. The driving force here is not shortage of manpower, but the desire for
higher rates and profits.

There is another economic reason to support such a move. Currently, Indian companies charge
between $15 to $25 per person-hour of effort from their overseas clients. The rates for
comparable expertise in the US are around $50 to $70; the rates in other developed or semideveloped countries might be lower. This means, that Indian software companies are already
operating at around one third to half the hourly cost in the west. As most Indian software
companies deploy lesser tools, and the level of technical education of many software
professionals is not always very high, the chances are that the productivity and quality of Indian
software may not be as high as in the West. All this means that it is unlikely that the rates that
Indian companies can charge will increase as much in future as they have in the past---after all if
the rate is close to the rate of an US or an European company, why would a US or European
customer come all the way to India to get its software developed, given the perceived risks and
psychological barriers that exist? On the other hand, the salaries are likely to continue rising.
This will create pressure on the profit margins, and alternative means will have to be devised to
increase profit margins. Going multinational might be just the right alternative for this.

FOCUSING FURTHER

Even if an Indian company wants to starts a company in USA, how should it face the
competition there and create a market for itself? Unless there is a reasonable chance of
succeeding, no company will make this move as investments are likely to be high. An average
SW professional in USA costs about $80,000. Hence, the cost of running a 50 person company
in US is about $400,000 per year. In addition, there is also the cost of setting up the company.
First prerequisite for this model to succeed is that the subsidiary should have a strong US or
European face. In other words, it should be a bona-fide local company, with local people, and,
perhaps even local shareholders. It should not be perceived as marketing or work sourcing arm of
an Indian company---in this situation, it is unlikely that any client will pay the prevailing local
rates. In addition, it will be most useful if the Indian connection of this US Company can be
exploited to create a niche in the US software services market. One possibility is to exploit the

11

time zone difference and the internet and multimedia technology to offer Rapid Application
Development (RAD) services in well-defined business areas. In the current times, there are
many business sectors, in which time to market is one of the most important parameters. For
these business segments, a rapid development service offering for their support software
can create a niche for itself. An example of this is financial services where frequently the
window of opportunity is small and so the software to support the services for this window has to
be developed rapidly. However, just having development teams in two time zones is not going to
be sufficient to provide a true RAD. Suitable development process models will have to be
developed, and technology will have to be fully exploited for this. For example, incremental
development models, or the evolutionary object-oriented models might have to be used to reduce
dependencies between work elements, libraries of reusable components for the market segment
will have to be built before hand to reduce the cycle time, proper distributed work-flow
management tools will have to be built on the internet, and multimedia workstations might have
to be used to pass work products and instructions from one developer to another. In other
words, a lot of work will have to be done to precisely define and make possible the service
offering. However, it is technically feasible (which was not the case a few years ago).
Year 2000 is another such service where a niche can be created. There are various estimates of
the total volume of business that will come due to the year 2000 problem varying from $50
billion to over $200 billion. One thing is clear that the year 2000 problem offers an enormous
business opportunity, which companies world over are trying to encash. A company in the west
that just offers a solution to the year 2000 problem might be able to create the niche needed to
focus and succeed in the market.

RISKS

Most of the risks in this strategy revolve around opening a center in the West, where costs are
very high, and market fiercely competitive. One risk is whether there is a demand for the
proposed service. A market survey can be used to get actual estimates of the market size and
estimate the value of the proposed service. Another risk will be in marketing this service and
showing that it is different and more effective than those offered by the competitors in the west.
This is where the companies will have to apply their business and marketing expertise to make
such a venture successful.

12

COMPANY PROFILE

IBMS MARKETING STRATEGY IN INDIA

IBM India Limited, a subsidiary of International Business Machines Corporation Inc. (IBM),
was set up in September 1999. IBM entered the Indian market with a joint venture with the Tata
Group in 1992. IBM is the only company in the world that offers end-to-end solutions to
customers from hardware to software, services and consulting. Since its inception in India, IBM
has expanded its operations considerably and currently operates through a network of 14 offices,
with regional headquarters at Bangalore, New Delhi, Mumbai, Kolkata and Chennai. The
Company has interests in sales and marketing of servers, PCs and software products and
services. IBMs businesses in India include the IBM Software Group, IBM Global Services, IBM
Consulting Services, IBM Global Financing, IBM Solution Partnership Centre (one among 10
worldwide), Linux Solution Centre (one among 7 worldwide), Software Development Centres,
Global E-Business Centre and a manufacturing facility at Pondicherry. IBM recorded total
revenue of US$ 606 million in FY 04 and is profitable in India. It has a workforce of 23,300
including those at its BPO centre, and 34 per cent of the total revenues come from exports.
According to internal sources, IBM has invested approximately US$ 10 million in India so far,
mostly in year 2000 for labs, and this does not include the Daksh investment.

13

MARKET SHARE

IBM India recorded 31.3 per cent market share in the notebooks segment (revenues) to gain the
leadership position in FY 04. IBM is a market leader in the servers segment with a 32 per cent
market share. In the lower-end server segment, IBM emerged the leader with a market share of
38.2 per cent.

ACHIEVEMENTS IN INDIA

IBM India was chosen as one of the Top 3 Employers in Indian ITs Best Employers Survey
conducted by Dataquest - IDC India. The same survey ranked IBM subsidiary, DaksheServices
as the Best Employer in the BPO Sector. IBM was also ranked second in a list of Dream
Companies, that respondents aspired to work in. IBM also appeared in the top 3 preferred IT
employers in the country in 2003-04, in an IT employer brand perception study by Brand-com.
IBM Global Services India was awarded the prestigious Gold certification by Cisco Systems, for
the relentless pursuit of customer satisfaction, training, support and specialization requirements
set by Cisco. In April 2004, IBM was awarded the Golden Rhino Award in the Server and laptop
category. The Golden Rhino Award is the channels seal of approval for the Most Reliable
Product in the market. IBM stands No.1 in the Portables (Notebook) category in the Customer
Satisfaction Audit 2004. The survey was conducted by Dataquest and IDC India among 4000
Enterprise CIOs. IBM ThinkPad has been chosen Laptop of the Year 4 times over the last 5
years. PC Quest Users Choice Award was picked up by IBM for its High End Servers. IBM has
also been adjudged Implementation Partner of the Year.

FACTORS FOR SUCCESS WIDE RANGE OF OFFERINGS

IBM has set the agenda for the industry with on demand business a kind of transformation
where an organisation changes the way it operates and reduces costs; serving customers better,
reducing risks and improving speed and agility in the marketplace. IBM is already working with

14

customers to transform them into on demand businesses. IBM is the only company in the world
that offers end-to-end solutions to the customers from hardware to software, services and
consulting. Linux support further enhances IBMs e-business infrastructure enabler capability.

IBM Global Services is the worlds largest information technology services and consulting
provider, generating record revenues and signings in 2003 of US$ 42.6 billion and US$ 55.5
billion, respectively. Some 180,000 professionals in more than 160 countries, including India,
help clients integrate information technology with business value - from the business
transformation and industry expertise of IBM Business Consulting Services to hosting,
infrastructure, technology design and training services. Leveraging IBMs unequalled scope and
scale, IBM Global Services delivers integrated, flexible and resilient processes - across
companies and through business partners that enable clients to benefit from the on demand
business model by saving money and making their businesses more competitive. IBMs offerings
of hardware and expertise in planning, deploying and maintaining infrastructure of any scale,
enable the company to gain a lead in the domestic outsourcing market. With a manufacturing
facility at Pondicherry for commercial desktops, low and midrange
servers, IBM is in a position to offer customized products to local customers.

THREE STAGE STRATEGY:-

IBM has adopted a three-step methodology that can be summarized as follows and performed in
the order suggested here:

CUSTOMER SEGMENTATION: We introduce advanced value and loyalty metrics and

enhance existing customer profiling in order to capture the value, loyalty, and response
behavior of customers instead of focusing exclusively on transactions and, for example,
mileage-based segmentations in the airline study.

CUSTOMER DYNAMICS: We identify customers' different lifecycle phases and dynamics

using dynamic programming techniques (MDPs). We estimate customer lifetime value and
risk (volatility) over variable time horizons by combining MDP models and Monte Carlo
simulations in order to estimate the valuerisk profile of customers.

15

 PORTFOLIO OPTIMIZATION: We optimize the planning of campaign sequences for

each customer profile in order to avoid saturation and cannibalization, in an effort to
maximize the value of customers over a given planning horizon. We optimize marketing
budget allocation in order to balance the valuerisk tradeoff of the overall portfolio of
customers using portfolio diversification techniques. The term saturation refers to situations
in which marketing campaign effectiveness has decreased significantly because a customer
has been subjected to an overwhelming number of campaign appeals. The term
cannibalization refers to situations in which marketing campaigns directed toward a customer
compete for the customer's interest, resulting in a waste of marketing resources.

MARKETING STRATEGY

Efficient implementation of channel strategy is one of the key factors driving IBMs success.
IBMs sales grew considerably as a result of the channel infrastructure, programmes and
opportunities provided by the Company to its partner organisations.

REDUCED PRICE FOR THE INDIAN MARKET

Realising that India was a highly untapped and fast growing market, IBM set up operations in all
the sectors of its business in the country. IBM reduced its
Notebook prices, bringing them closer to the desktop models to increase its market share since
the laptop to desktop ratio in India is 1:3 against 1:2 in developed countries.

STRONG PARENTAL SUPPORT

IBM Corporation provides continuous support to IBM India in terms of global human resources
and technology. IBM regularly exchanges its talent pool across countries, and recently shuffled
the top management across countries.

16

INCREASING THE MARKET POTENTIAL

IBM has initiated plans to increase the market potential by increasing the awareness on IT among
the masses. IBM has entered the academic sector by providing IT education, thereby expanding
the user market. The company has pioneered partner relationships with a number of educational
institutions including the IITs at Delhi, Kanpur and Chennai and a number of renowned IT
schools in the country.
Leveraging the India Advantage India as a global sourcing base for BPO operations
IBM expanded the scale of its BPO operations in India with the acquisition of Daksh, the third
largest BPO outfit in India with over 6,000 employees. This enabled IBM to have an
international presence in BPO operations with big-ticket customers and scale up its telecom,
insurance and Internet customers.

INDIA AS AN R&D HUB

India Research Laboratory, Delhi: (one among 8 facilities worldwide): IBMs India Research
Laboratory (IRL) focuses on areas critical to expanding the countrys technology infrastructure.
It also has significant initiatives in Services and Sciences, Information Management, User
Interaction Technologies, e- Commerce, Life Sciences, Distributed Computing and Software
Engineering. Currently, IRL researchers are working on several projects covering bioinformatics,
text mining, speech recognition for Indian languages, natural language processing, grid
computing, and autonomic computing, among others.
India Software Labs at Bangalore and Pune: The Software Labs in India develop, enhance
and support key IBM software products & technologies in collaboration with other IBM labs
worldwide.

Center for Advanced Studies (CAS) at Bangalore was established at the India Software Labs to
allow universities, access to IBMs leading-edge productdevelopment and the supporting
infrastructure; while giving IBM the opportunity to work with academic leaders and researchers
on research projects.

17

IBM Innovation Center for Business Partners: (one among 10 facilities worldwide)
Independent Software Vendors are encouraged to port their solutions on IBM platforms at this
Center and develop Web based applications for Indian customers.

Linux Solution Center, Bangalore: (one among 7 facilities worldwide) The Center supports
Business Partners and Independent Service vendors across the
ASIAN/South Asia region.

IBM Linux Competency Center, Bangalore: (one among only 4 facilities in Asia) This Center
develops standards and embedded software for open source,
undertaking high-end research in the area for IBM Worldwide.

Global e-business Software Center, Gurgaon: This state-of-the-art center combines IBMs
global experience and technology expertise to deliver e-business solutions for Indian
organisations and the government through the e-Governance Centre.

Engineering & Technology Services Center, Bangalore: This Center provides technology
design services for advanced chips, cards and systems to companies in India and across Asia.
India as a software development hub IBM also has Global delivery centres in Bangalore, Pune,
Gurgaon and Kolkata. They deliver best-of breed technology solutions to IBM customers
worldwide covering middleware, e-business technologies, enterprise and Web technologies, data
warehousing across functional areas like Supply Chain Operation Services, Financial
Management Services, Human Resource Services, Customer Relationship Management, eBusiness Integration and Application Management Services.

Just a few years ago, IBM (IBM) looked stodgy compared with agile Indian tech players such as
Infosys, Wipro, and Tata Consultancy Services. But today, Big Blue has become the leader in the
Indian tech services industry, with 10% of the domestic market. Its Indian workforce has more
than doubled in two years, to 53,000about 15% of its worldwide totaland Bangalore and
New Delhi are now home to IBM's largest research and development labs outside of the U.S.
Since inking a $750 million, 10-year agreement with leading cellular carrier Bharti Airtel Ltd. in

18

2004, IBM has been racking up deals in India faster than any of its local competitors. In the first
half of 2007 alone, it signed some $1.4 billion in long-term contracts. Says Bharti's innovation
director, Jay Menon, a former IBMer who now sits on Big Blue's advisory board: "India is the
jewel in IBM's global crown." Indeed, the company is so well entrenched in the subcontinent that
in 2006, Chief Executive Samuel J. Palmisano was voted "IT leader of the year" by Nasscom,
India's software industry association. And local heavyweights view IBM as a formidable
competitor, as it has signed up a roster of blue-chip clients such as real estate developer DLF,
state-run Canara Bank, and the Indian tax department. "IBM has really understood what India is
all about," says Nasscom President KiranKarnik.
At the same time, the company has worked hard to integrate India into its worldwide operations.
That has allowed IBM to eliminate 20,000 jobs in high-cost markets such as the U.S., Europe,
and Japan. The success of this strategy was confirmed this summer when IBM reported secondquarter revenues were up 9%, to $23.8 billionpowered in part by a 10% increase at its IT
services group, which suffered mightily at the hands of its Indian rivals in the early part of this
decade. IBM hasn't been shy about plowing big bucks into India. Instead of creating a tech
services operation from scratch there, which could have taken years, itsnapped up call-center
operator Daksh for $150 million in 2004; the outfit now handles back-office operations for the
likes of Sprint and Dun & Bradstreet. Since then, IBM has spent another $2 billion in India
building new facilities and hiring thousands.
Research is also a big part of the equation. IBM has set up R&D centers staffed by 3,000
engineers in India, which have become a source of innovation on everything from software to
semiconductors to supercomputers. One team, for instance, developed a Web-based program that
analyzes a person's accent, grammar, and vocabulary, which is used to evaluate applicants for
jobs at IBM's call center operations, and the company says it could be deployed more widely to
test language fluency. IBM's rapid expansion in India has turned up the heat in the competition
for skilled workers. Big Blue added some 10,000 employees to its India payroll last year
compared with 25,000 for all of the Indian players combined. In Pune, a rapidly developing IT
center near Mumbai, the company has been dispatching vans with signs saying "IBM is hiring"
to the gates of rivals at lunch time. "Their hit rate is pretty good," laments a manager at a tech
firm that has lost employees to IBM. The company's success is spurring Indian rivals to look for
more opportunities in their own backyard after years of focusing on customers overseas. Infosys,
for instance, says it will now start bidding for Indian deals, something it hasn't done in the past.
"IBM has created a market. Now they will find they will have to share," says Gaurav Gupta, who
heads the India business at Everest Group, a tech advisory firm in Bangalore. The folks at IBM
are unfazed. "Competition is welcome," says Shanker Annaswamy, IBM's India chief.
IBM India has recently announced the launch of the SME operations in Jamshedpur, as part of its
expansion plans to enter 14 new cities in the country. This would enable IBM to cater to specific
requirements to enable customized services to SMB clients spread across Jamshedpur and

19

neighboring markets. IBM envisions setting new standards of excellence through these newly
opened centres. As a part of it strategy to aggressively tap the SMB market in India, IBM is
slated to expand operations in six additional cities including Nasik, Surat, Bhubaneswar, Jaipur,
Madurai and Ludhiana in India. IBM had earlier announced the launch of similar centers in
Vizag, Chandigarh, Nagpur, Coimbatore, Goa, Bhopal and Lucknow. Jamshedpur, already a
strong hub for iron and steel, manufacturing, cement and other small and medium scale
industries is emerging as an important centre for IT services. Our centre here will, in addition to
demonstrating our commitment to our SMB clients and more importantly help them compete
more innovatively and effectively in a competitive marketplace to enhance return-on-investment
and fuel growth said VivekMalhotra, VP GSMB, IBM India/ South Asia. With over 3000
SMB customers in India, IBMs operations in Jamshedpur will target various clients in Iron &
Steel, Mining, Metals, Government, Education, Auto Ancillary, Power generation. Currently,
IBM has been delivering solutions to Tata Steel, Government of Jharkhand etc.
IBM has invested in the development of products and services specifically priced and designed
for the SMB marketplace under the brand name IBM Express Portfolio. IBM's Express
portfolio is comprised of hardware, software, services, solutions and financing and is designed to
meet specific criteria for SMBs. As the fastest growing sector for IBM India, the Global Small &
Medium Business (GSMB) unit is ready to address this growth and offer SMBs the solutions and
technologies that are critical to their growth in a challenging market. Mid-market companies
have distinct needs that are often ignored by most service providers. IBMs Technologies and
Solutions for Indian Small and Mid-market businesses provide a competitive edge in this era of
globalisation. These offerings are delivered through sales and marketing team of 6,000 people
and a network of 90,000 Business Partners, organized in 243 local sales territories around the
world.

FUTURE PLANS

With good success in the country, IBM plans to make the Indian subsidiary a hub for global
operations and for its Linux initiatives in the South East Asian region.

20

Chapter-2
Research
Methodology

21

METHODOLOGY OF STUDY:
The project is a systematic presentation consisting of the enunciated problem, formulated
hypothesis, collected facts of data, analyzed facts and proposed conclusions in form of
recommendations.
The data has been collected from both the sources primary and secondary sources.

DATA COLLECTION:
Primary Data:
Primary data was collected through survey method by distributing questionnaires to employees.
The questionnaires were carefully designed by taking into account the parameters of my study.
Secondary Data:
Data was collected from web sites, going through the records of the organisation, etc. It is the
data which has been collected by individual or someone else for the purpose of other than those
of our particular research study. Or in other words we can say that secondary data is the data
used previously for the analysis and the results are undertaken for the next process.
KIND OF RESEARCH
The research done by
Sample Design:
A complete interaction and enumeration of all the employees was not possible so a sample was
chosen that consisted of 25 employees. The research was taken by necessary steps to avoid any
biased while collecting the data.

22

Tools of Analysis:
The data collected from both the sources is analyzed and interpreted in the systematic manner
with the help of statistical tool like percentages.
RESEARCH DESIGN:
A research design is the arrangement of the condition for collection and analysis of data
in a manner that aims to combine relevance to the research purpose with economy in procedure.
A research design is the specification of methods and procedure for acquiring the information
needed to structure or to solve problems. It is the overall operation pattern or framework of the
project that stipulates what information is to be collected from which source and be what
procedures.
1
2
3
4
5
6
7
8

What is study about?

What is study being made?
Where will the study be carried out?
What type of data is required?
Where can the required data be found?
What will be the sample design?
Technique of data collection.
How will data be analyzed?

23

Objective of the Study:

The objectives of the research are:
Primary Objective: To study the marketing strategies currently adopted by IBM global services
India private limited.
Secondary Objective: To critically analyze the marketing strategy in this highly competitive
Indian scenario and also its competitive product portfolio.

Scope of the study

Scope of the study is very wide.

We are witnessing globalization and collaboration on an unprecedented scale. The world
has truly become flat.
Geography is now history.But globalization presents as many threats as opportunities.
In order to thrive and grow in this era, you must have the edge of differentiation in your
product or service or even your business model.
Maintaining high quality standards, innovative approach, highly skilled labor forces, etc.
are the key factors which make this organization a huge success rate, among other
competitors in the Indian market.

24

CHAPTER-3
Data Analysis
And Interpretation

25

PRIMARY DATA: Primary data was selected from the sample by a self administrated
questionnaire in presence of the interviewer.
SAMPLE SIZE:
The survey is conducted among 50 respondents
Sample Area: NCR Delhi
Sample unit: Employees of IBM Global services in addition to the officials of other companies
like HP, HCL, Satyam etc. in regard to the current research study
SECONDARY DATA:

Secondary data has been used which is collected through

Articles,
Reports,
Journals,
Magazines,
Newspapers and
Internet

SAMPLING TECHNIQUE
Random sampling technique has been employed to extract the fruitful results. This includes the
overall design, the sampling procedure, the data collection methods, the field methods and the
analysis procedures.

26

1. SINCE HOW LONG YOU ARE ASSOCIATED WITH IT INDUSTRY IN INDIA?

0-5 Years

6-10 Years

More than 10 Years

27

2. ACCORDING TO YOU WHICH IS THE MOST CONSUMER ORIENTED

BRAND?
HCL
COMPAQ
IBM
WIPRO
OTHERS

28

3. WHAT IS THE MARKET POTENTIAL OF IBM GLOBAL INDIA?

Excellent
High
Medium
Low
Cant Say

29

4. HOW WOULD YOU RATE CONSUMERS PREFERENCE FOR IBM GLOBAL

INDIA?

Excellent
High
Medium
Low
Cant Say

30

5. WHAT IS EFFECT OF PRODUCT AND POSTER DISPLAY?

Excellent
Very Good
Good
Average
Poor
None

31

6. HOW WOULD YOU RATE THE EFFECT OF CATALOGUE?

Very Good
Good
Average
Poor
None

32

7. PLEASE RANK PROMOTIONAL ACTIVITIES ON THE SCALE OF

EFFECTIVENESS (RANK 1-6)

Canopy
Ads in Newspapers
Direct Marketing
Insertions
EPP
Cant Say

33

8. HOW WOULD YOU RANK THE IN-SHOP PROMOTIONAL ACTIVITIES OF

CHANNEL PARTNER?

Excellent
Very Good
Good
Average
Poor
None

34

9.
GIVEN THE PRESENT SOFTWARE INDUSTRY IN INDIA, CAN WE BEGIN
WITH THE ASSUMPTION THAT IBM INDIA IS A MAJOR SOFTWARE COMPANY
OPERATING IN THE MARKET?

68 percent ------------------------- Yes

27 percent -----------------------------No
05 percent ---------------------------- Do not know/ Can not say
IBM Global can begin with a happy note that 68 per cent of the respondents feel that IBM India
is a major software company in India, despite the mushrooming of the software industry and the
continuous acquisition and merger. A mere 27 per cent feel that IBM India is not a major
software industry in India and 05 per cent have no opinion on this question.

35

10. HOW DO YOU SEE THE PROSPECT OF GLOBAL/FOREIGN SOFTWARE

COMPANIES IN INDIA?

24 percent ----------------------------Have a very good prospect

55 percent -----------------------------Have to face a competitive market
12 percent -------------------------------- Have a dim prospect
09 percent ------------------------------------Do not know /Can not say
The above question is significant in the context that IBM India is an expansion of IBM Global.
They have a very good reason to smile in view of the fact that 55 per cent of the respondents are
of the opinion that the presence of foreign software companies only increases the
competitiveness of the Indian industry but they themselves also have to face the competitive
environment. 24 per cent are of the opinion that they have a very good prospect in India against
12 per cent respondents who do not feel so. Only 09 per cent respondents have no opinion on this
issue.

36

11. HOW DOES THE FOREIGN SOFTWARE COMPANIES AFFECT THE

PROSPECTS OF THE DOMESTIC PLAYERS IN THE INDIAN MARKET?

32 percent ----------------------- have reduced the profit margin of the domestic players
53 percent ------------------------ have made the software industry more competitive.
07 percent ----------------------- do not have significant effects on the domestic players
operating in the software industry
08 percent ------------------------ do not know / can not say

37

12. WHAT IS THE MARKET SIZE OF THE IBM INDIA IN THE SOFTWARE MARKET
IN INDIA?

74 percent -------------------------------Has a larger market size.

16 percent ------------------------------ Has a moderate market size.
07 percent --------------------------------Has a marginal market size
03 percent -------------------------------- Do not know /Can not say

38

13. WHO ARE THE MAJOR CONSUMERS OF IBM INDIAS PRODUCTS AND
SERVICES?

23 percent -------------------- domestic market

27 percent ---------------------foreign market
44 per cent -------------------- both domestic and foreign market
06 percent --------------------- Do not know /Can not say
Fro the above response it is very clear that being a local operational body of a foreign company,
the customer base of the IBM India is not concentrated only in the domestic market but in the
foreign market as well.

39

14. IBM GLOBAL HAS RECENTLY ACQUIRED DAKSH BPO. IN THIS CONTEXT,
DO YOU THINK THAT ACQUISITION AND MERGER IS A SUCCESSFUL
MARKETING STRATEGY FOR IBM INDIA?

Yes ----------------------------------------------- 48 per cent

No ------------------------------------------------ 26 per cent
Do not know/ Can not say ------------------ 26 per cent
Being a competitive company, 48 per cent respondents are of the opinion that acquisition and
merger can be an effective marketing tool for IBM India. 26 per cent do not support this idea and
26 per cent have no comments to offer on this issue.

40

15. WHAT MEASURES THE COMPANY IS TAKING, PARTICULARLY IN THE FIELD

OF MARKETING TO MAKE ITS PRODUCTS ATTRACTIVE AND COMPETITIVE IN
THE MARKET?
(i)
(ii)
(iii)
(iv)

Innovative Distribution channels

Professionalism within the organization
Increase in market share through acquisition and merger.
Other innovative marketing practices, inconsideration of the strategies adopted by the
rival companies and their results with regard to.
Innovative distribution channels ranks first as regards to the effective marketing strategy of IBM
in India followed by market expansion and professionalism.

41

16. IBM INDIA IS A SUCCESSFUL EXPERIMENTATION VENTURE OF THE IBM

GLOBAL. DO YOU AGREE?

Yes ---------------------------------------------------- 78 per cent

No ------------------------------------------------------ 13 per cent
Do not know/ Can not say ------------------------- 09 per cent
The above response gives a very positive rank to the IBM Indian operation, in view of the
analysis that 78 per cent of the respondents believe that IBM India is a successful business
expansion strategy of IBM Global. Only 13 percent do not feel so and 09 per cent of the
respondents have no considered opinion on this issue.

42

17. WHAT ARE THE REASONS THAT HAVE CONTRIBUTED TO THE SUCCESSFUL
INDIAN OPERATION OF IBM GLOBAL IN INDIA?

R&D facility-------------------------------------------------- 18 per cent

Market Liberalization--------------------------------------- 14 per cent
Skilled human resource ------------------------------------ 45 per cent
Logistic and other support of the Parental Branch--16 per cent
Other factors -------------------------------------------------- 7 per cent
The above response is the reason why the skilled human resource in India are so valued at the
global level. 45 per cent of the respondents are of the opinion that it is the highly skilled
manpower are more responsible for the effective success of IBM India. This is followed by R&D
facility in India, support of IBM Global, market liberalization and other factors.

43

18. DO YOU THINK THAT THE EXPANSION OF IBM INDIA TO OTHER BUSINESS
SEGMENTS LIKE THE RETAIL SECTOR WILL HELP TO ENHANCE ITS MARKET
POTENTIAL?

Yes ---------------------------------------------------------54 per cent

No --------------------------------------------------------------28 per cent
Do not know/ Can not say -----------------------------18 per cent
The above response suggests that there is scope for market expansion of IBM India by entering
into other fields such as the retail sector. It can be considered as a recommendation for the
company for formulation of future expansion guidelines.

44

19. IBM INDIA HAS A FUTURE GROWTH. YOUR OPINION

75 percent -------------------- IBM India is gradually spreding its wings and being a very big
company has the capacity to absorb short term losses, hence has a very good prospect for the
future market in India.
20 percent ---------------------- Its future is like any other private software companies in India
5 percent -------------------- do not know/ can not say

45

20. MAJOR WEAKNESS OF IBM INDIAS MARKETING STRATEGY.

Branding -----------------------------------Publicity ----------------------------------------Infrastructure assessment and Development --Lack of effective distribution channels
Do not know / Can not say -----------------

46

07 per cent
09 percent
26 percent
51 per cent
07 per cent

21. IF YOU CAN RECALL IBM WAS ASKED TO WITHDRAW FRO INDIA IN 1977.
WHY?

During 1977, IBM was asked to withdraw from India due to its unwillingness to comply with the
Foreign Exchange Regulation Act (FERA) of 1973. However, with the signing of Memorandum
of Understanding between the U.S. and India, the easing of trade restrictions by the Government
of India against foreign firms, the declining value of the U.S. dollar, the slump in the U.S.
computer market, the rapid growth in the Indian computer market, and changes in other
environmental factors, IBM again began actively seeking and securing new business. By the
mid-1980s, IBM had secured a number of large contracts and was on the verge of re-entry into
the burgeoning Indian computer market.

47

Findings of the study

IBM has come a long way since the eighties when the company first centralised its
database and direct marketing was still a very new concept.
IBM's integrated marketing manager, explains that direct marketing is now an important
component of the company's marketing strategy.
'In the last 12 years direct marketing has gradually increased in scope and importance as
one of the major tools IBM uses in the marketing mix
IBM has its own database marketing department internally.
Despite a central database facility, each country maintains its own individual database
due to the sensitive issue of data privacy. Kettle explains that the company wants to 'lead
from the front' in this area, and imposes a stringent policy on how data is held.
The database is segmented according to the aims of each individual campaign.
'At a certain level the database is meant to be a reasonably complete source of
information, but obviously where it stops is where we begin to rely heavily on Blau
Tequila's expertise to recommend list purchases when we're going into that smaller end of
the marketplace

48

SWOT ANALYSIS

Strengths
1.
2.
3.
4.

Valuable intellectual property, software, patents, ideas.

Talented workforce.
Research and development ($5.7 billion).
A multinational organization.

Weakeness
1. 2,60,000 expensive employees.
2. High operating cost.
Opportunities
1.
2.
3.
4.

Collaborative innovation.
Open source.
Expensive products of competitors.
Accepting standards brings economic expansion.

Threats
1. Low cost generic competition (commoditization).
2. Outsourcing.
3. New competitors in service market. Example: Dell, Accenture

49

CHAPTER-4
CONCLUSIONS

50

CONCLUSION

We have found that the marketing strategies followed by them are really helping them to increase
their market potential and growth in this highly competitive marketplace. Since the financial
reforms of 1991, there have been significant favourable changes in Indias service sector which
was earlier lying as dormant. This thesis has assessed the impact of the reforms by examining in
the context of a few objectives as stated earlier. Like custom software, other software services
also face limits to off-shoring. Some limits are physical, such as the need for proximity to
provide hardware installation and support services. Other limits may also exist, especially if tacit
(un-codified) knowledge is to be exchanged. Technological development may change these
limits. For example, the invention of the router led to the creation of data centers, thus reducing
the need for on-site storage hardware and support services. Similarly, the Internet has enabled the
remote installation and maintenance of software. By building targeted industry solutions that
combine elements of IBM products and services as well as applications from independent
software vendor (ISV) partners, IBM believes it will be selling the way customers want to buy.
In some ways, IBM sees itself moving back to its IT solutions vendor positioning of 20-30 years
ago, and away from the piecemeal, build-it-yourself sales model that has characterized the
industry in recent times.

51

Limitation of the study:

The study is subjected to the following limitations
The study is based on the data provided by the company statements so, the limitations of
the companys employees remaining are equally applicable.
In some cases data is collected from the companies past records.
Lack of support of top management.
Improper Actualizations
Inadequate Development programmes.

52

RECOMMENDATION OF THE STUDY

We have found that the marketing strategies followed by them are really helping them to increase
their market potential and growth in this highly competitive marketplace. Since the financial
reforms of 1991, there have been significant favourable changes in Indias service sector which
was earlier lying as dormant. This thesis has assessed the impact of the reforms by examining in
the context of a few objectives as stated earlier. Like custom software, other software services
also face limits to off-shoring. Some limits are physical, such as the need for proximity to
provide hardware installation and support services. Other limits may also exist, especially if tacit
(un-codified) knowledge is to be exchanged. Technological development may change these
limits. For example, the invention of the router led to the creation of data centers, thus reducing
the need for on-site storage hardware and support services. Similarly, the Internet has enabled the
remote installation and maintenance of software. By building targeted industry solutions that
combine elements of IBM products and services as well as applications from independent
software vendor (ISV) partners, IBM believes it will be selling the way customers want to buy.
In some ways, IBM sees itself moving back to its IT solutions vendor positioning of 20-30 years
ago, and away from the piecemeal, build-it-yourself sales model that has characterized the
industry in recent times.

53

BIBLIOGRAPHY

BOOKS
Marketing Management, Keller
Marketing Management, Gambhir & Prasad
Marketing Management, Sellins

JOURNALS
ICFAI University Press Journals On Marketing
AAAI Journals On Marketing

MAGAZINES
Business India
Indian Business & Economy
How to Build Strategy, Walkins

54

INTERNET
www.ibm.com

Annexure

55

QUESTIONNAIRE

This survey is being carried out to gather information about the marketing strategies of IBM
Global India. The information is being used by management students for academic purpose only

1. Since how long you are associated with IT industry In India?

0-5 Years

6-10 Years

More than 10 Years

2. According to you which is the most consumer oriented brand?

HCL

Compaq

Satyam

Wipro

Others (Please specify) ________________________

3. What is the market potential of IBM Global India?

56

HP

 Excellent

High

Low

Cant Say

Medium

4. How would you rate consumers preference for IBM Global India?

Excellent

High

Low

Cant Say

Medium

5. What is effect of Product and Poster Display?

Excellent

Very Good

Average

Poor

Good

None

6. How would you rate the effect of Catalogue?

Very Good

Good

57

Average

 Poor

None

7. Please rank promotional activities on the scale of effectiveness (Rank 1-6)

8.

Canopy

Ads in Newspapers

Direct Marketing

Insertions

EPP

Cant Say

How would you rank the in-shop promotional activities of Channel Partner?
Excellent

Very Good

Average

Poor

Good

None

9. Given the present software industry in India, can we begin with the assumption that IBM
India is a major software company operating in the Market?

58

 68 percent ------------------------- Yes

27 percent -----------------------------No
05 percent ---------------------------- Do not know/ Can not say
10. How do you see the prospect of global/foreign software companies in India?
24 percent ----------------------------- Have a very good prospect
55 percent ------------------------------ Have to face a competitive market
12 percent -------------------------------- Have a dim prospect
09 percent -------------------------------------- Do not know /Can not say

11. How does the foreign software companies affect the prospects of the domestic players in
the Indian market?
32 percent ------------------------------ have reduced the profit margin of the domestic
players
53 percent ---------------------------------- have made the software industry more
competitive.
07 percent ------------------------------- do not have significant effects on the domestic
players operating in the software industry
08 percent ------------------------------- do not know / can not say

12. What is the market size of the IBM India in the software market in India?
74 percent -------------------------------Has a larger market size.

59

 16 percent ------------------------------ Has a moderate market size.

07 percent --------------------------------Has a marginal market size
03 percent -------------------------------- Do not know /Can not say
13. Who are the major consumers of IBM Indias products and services?

23 percent -------------------- domestic market

27 percent ---------------------foreign market
44 per cent -------------------- both domestic and foreign market
06 percent --------------------- Do not know /Can not say

14. IBM Global has recently acquired Daksh BPO. In this context, do you think that
acquisition and merger is a successful marketing strategy for IBM India?

Yes ----------------------------------------------- 48 per cent

No ------------------------------------------------ 26 per cent
Do not know/ Can not say ------------------ 26 per cent

15. What measures the company is taking, particularly in the field of marketing to make its
products attractive and competitive in the market?
Innovative Distribution channels

60

 Professionalism within the organization

Increase in market share through acquisition and merger.
Other innovative marketing practices, inconsideration of the strategies adopted by the
rival companies and their results with regard to.
16. IBM India is a successful experimentation venture of the IBM Global. Do you agree?
Yes ---------------------------------------------------- 78 per cent
No ------------------------------------------------------ 13 per cent
Do not know/ Can not say ------------------------- 09 per cent

17. What are the reasons that have contributed to the successful Indian operation of IBM
Global in India?
R&D facility-------------------------------------------------- 18 per cent
Market Liberalization--------------------------------------- 14 per cent
Skilled human resource ------------------------------------ 45 per cent
Logistic and other support of the Parental Branch--- 16 per cent
Other factors ---------------------------------------------------- 07 per cent

18. Do you think that the expansion of IBM India to other business segments like the retail
sector will help to enhance its market potential?
Yes ---------------------------------------------------------- 54 per cent
No --------------------------------------------------------------- 28 per cent
61

 Do not know/ Can not say ------------------------------ 18 per cent

19. IBM India has a future growth. You opinion
75 percent -------------------- IBM India is gradually spreding its wings and being a very
big company has the capacity to absorb short term losses, hence has a very good prospect
for the future market in India.
20 percent ---------------------- Its future is like any other private software companies in
India
5 percent -------------------- do not know/ can not say

20. Major Weakness of IBM Indias Marketing strategy.

Branding ------------------------------------ 07 per cent
Publicity ----------------------------------------- 09 percent
Infrastructure assessment
and Development ---- -----------------------------26 percent
Lack of effective distribution channels51 per cent
Do not know / Can not say ----------------- 07 per cent

62