IBM, Indian firm strengthen ties

Big Blue's extended partnership with Tata Consultancy Services underscores India's growing IT presence.

Tata Consultancy Services said Thursday that it has extended a partnership with IBM, another sign of momentum for India's technology industry.

TCS, which bills itself as India's oldest and largest information technology services company, has had a relationship with IBM in which the companies sell each other's products, TCS spokesman Victor Chayet said. The new agreement focuses on technologies including portals and so-called "on-demand computing," and involves TCS training more employees in IBM technology. Exact terms of the agreement were not disclosed.

Although TCS and IBM compete in the realm of IT services contracts, the partnership centers on IBM software and hardware products, Chayet said. "It's 'coopetition,'" he said. "Sometimes you're competing with IBM for business, sometimes you're partnering."

TCS has similar partnerships with other companies, such as Hewlett-Packard, Sun Microsystems and Oracle, Chayet said.

The company's extended partnership with IBM in effect signals the emerging strength of TCS and other Indian technology services companies. TCS boasted revenue of about $1.3 billion for the year ended March 31, up from about $1.1 billion the year before. It has some 30,000 employees worldwide. The 35-year-old company, part of a broader Indian business conglomerate, recently filed for an initial public stock offering in India.

A study released this week by researcher Gartner found that India-based vendors of IT services saw their revenue grow 29 percent in 2003 compared with 2002. That rise far exceeded the 4 percent growth among U.S.-based vendors. Still, the Indian companies accounted for just 1.4 percent of the total worldwide IT services market of $569 billion, Gartner said.

More than 90 percent of revenues at India-based vendors came from customers outside India, Gartner said. TCS and other India tech companies such as Infosys Technologies and Wipro Technologies depend partly on lower labor costs in India to win over customers in the United States.

U.S.-based tech companies also have expanded their operations in lower-wage countries such as India and China. IBM, for example, has thousands of workers in India and is acquiring a 6,000-person Indian company that offers transaction processing and telemarketing services.

The "offshore" or "global delivery" model has come under fire from critics who worry that U.S. tech jobs are being replaced and that U.S. tech leadership is in jeopardy in the long run.

On the other hand, defenders of sending work offshore say it ultimately helps the U.S. economy and U.S. workers.

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