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IBM, an Indian company?

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| Heading for India Economic Summit ??

November 20, 2006

IBM, an Indian company?

Steve Hamm

One of my first stops in Bangalore was IBM, which has nearly 50,000 employees in India now and his growing so fast that it might soon have the largest employment level of any tech company in India. TCS has about 80,000, so IBM still has a ways to go, but, if it doesn't overtake TCS it won't be for lack of effort. In addition to stationing an army of people in Bangalore, IBM now has a bunch of people in Hyderabad, Delhi, Chennai, Pune, Kolkata, and Gurgaon. This way, it casts a wide net for talent and avoids the worst of the recruiting wars in Bangalore.

It's in the middle of a major HR push aimed at lowering costs and retaining top talent. On the cost side, it's moving from a 60/40 mix of hiring experienced people versus fresh graduates to something more like 50/50. On the retention side, it's giving Indian employees more opportunities to have overseas assignments, working with employees practically from day one to map career paths and line up the appropriate on-line and classroom skills training, and improving the abilities of employees to move around within the Indian business units. The HR bosses have even appointed a staff of a dozen or so "royal ambassadors" whose job it is to keep track of new hires and make sure they're assimilating well.

Person after person at IBM told me today that India's woeful infrastructure isn't their big problem; it's recruiting, training, and retaining employees. "India is the Wild West right now," says Harish Grama, vice president in charge of IBM's Software Lab in Bangalore. "There are young kids who are looking for a 20% raise a couple of years after they come on board. They're taking the short view, because they have so much opportunity. I can pay very competitively and more than most, but I'm faced with new multinationals coming in and cherry picking good people at two times what I pay."

The IBM solution is to try to convince people that a career is more important than just money. It seems to be working fairly well for Grama. His attrition rate is below 10% on an annual basis, substantially lower than the 15% industry average for software programmers in India.

11:28 AM


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How are the employment numbers with other Indian tech firms?

Must say, that pay scales in Indian Tech firms have surpassed what one would have imagined in India even 6-7 yrs. back. .

May be thats why youngsters are vying for higher pays.

Posted by: Tirath at November 22, 2006 05:06 AM

I think 10% sounds like a fabulously low attrition rate. In fact, I have trouble believing it, especially since the guy complains about attrition so much. I don't believe the 15% figure either. In an industry growing as fast as software in India, I think it's almost statistically impossible.

Grama says he pays Indians well, but that others pay them twice as much. Any idea what kind of numbers he's talking about?

Posted by: steve baker at November 22, 2006 09:40 AM

What a skeptic, Baker!!

What people tell me is that call center attrition in India is 60 to 90%, but that attrition for software engineers is much better, around the 15% that was common in Silicon Valley in the 1990s boom.

Accenture people told me yesterday that they originally hired experienced engineers and paid a premium to lure them away from their employers, but now they hire more freshers and pay the industry rate.

New graduates can be hired for about $10,000 per year. The salaray inflation rate is between 12% and 15%.

Posted by: steve hamm at November 22, 2006 09:06 PM

My view is that new graduates will be cheaper than $10,000/- (Rs. 4,50,000/-) in most cases. More likely to be around $7,500/- (Rs 3,40,000).

Posted by: Ravi at December 12, 2006 12:38 AM

Yes, it is true that IBM may be ramping up its workforce in India. But I have this to say.....why has IBM (and indeed EDS) been losing some major infrastructure service deals to an India based company like HCL Technologies? Yet again HCL has won a $200 million infrastructure and applications development & maintenance deal from Skandia (a major U.K. based insurer). This is not the first time. HCL won other big infrastructure deals such as DSG International, Teradyne and Autodesk right under the noses of IBM and EDS. Surely this tells me that IBM does not have a comprehensive offshore strategy.

Posted by: DB at December 21, 2006 12:49 PM

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