The Empire Strikes Back: IBM Automates Tech Services

Steve Hamm

For half a decade, the top Indian software services outfits have been giving fits to the West's tech services giants. With low prices and high quality, they have forced the likes of IBM, Accenture, and EDS, to discount prices and move massive numbers of programming jobs to India. Well, IBM has launched a counterattack. Its answer: automation. Big Blue is putting together services in product-like packages that combine off-the-shelf software components and standard services, all at standard, published prices. (It announced 11 of these on Oct. 3) This means less customization--with its huge requirements of manual labor. Unless the Indians respond strongly with their own product-like packages, this could be the turning point in the battle between the upstarts and the powers that be.

A key factor in how this competition plays out is the big trend in corporate software, called Service Oriented Architecture. This is the concept that pieces of software functionality, each mapping to a business process, can be written as reusable components—and then the components can be stitched together to create large and complex applications. Also, existing applications can be broken up into components and used the same way. All of these software components exist on corporate networks and are listed in directories, so they can be tapped by programmers or service consultants as if they were services. The idea is to save a ton of money on programming and get projects done much more quickly.

IBM is playing the SOA card to the max. At its announcement of new SOA components and related services on Oct. 3, software unit GM Steve Mills and technology services GM Mike Daniels described it as a major thrust for the company. “IBM will invest more than $1 billion this year in SOA-related projects, in technology and in new services,” Mills said. On that day, they announced enhancements to 23 SOA products and four new products, in addition to the 11 new service offerings.

IBM’s SOA play is already massive. The company claims to have 3,000 such engagements—256 of them published references.

Where are the Indians in all of this? Not as far behind as you might think, according to Forrester Research. A Forrester report published in September put IBM, Accenture, and BeaingPoint at the head of the pack in SOA, but ranked India’s TCS not far behind and ahead of CSC and Capgemini. Forrester considers all of them to be strong performers. Both Wipro and Infosys, the other two top Indian firms, were right on the cusp of the strong performer category.

There’s a bit of a disconnect here, though. TCS says it has 100 SOA engagements going—way behind IBM. So it’s not clear to me if they’re counting the same way. Scale matters here, because the more SOA technology a tech company uses, the fewer programmers it needs to do the work.

Over the coming months, we’ll be able to use SOA deals as a scorecard to keep track of the competition between India’s tigers and the West’s old lions.

Before it's here, it's on the Bloomberg Terminal.