IBM India plans to tap new revenue streams from telecom companies

As demand from the telecom segment shrinks, with rising competition eating into voice rates in a big way, IBM India is preparing to tap new revenue avenues from this segment as telecom companies eye enterprises and data space in a big way. 

Telecom continues to be the largest division for IBM in India, with clients such as Bharti Airtel and Vodafone. The second largest business generating segment for the company is financial services. Despite the disruption seen in the telecom segment, the global information technology major says service providers in that segment are building up huge war chests to support the data-demand explosion over the past two years. "The interesting fact is that this telecom disruption is not capital constraining. Instead, all telcos are literally creating war chests. The Vodafone-Idea merger is clearly in that direction. Airtel has a clear focus with consolidation of assets for building up a capital base, which will enable them to invest for the next three years," Karan Bajwa, managing director at IBM India, told Business Standard. 

“The amount of money that will go into the network to support the data explosion, which has risen around 10 times in two years, tells you that there is going to be huge investment," he added.

IBM says it has seen early signs of renewed interest from Indian telecom players on the enterprise business, traditionally been low as compared to other segments. "Areas like security and IoT (internet of things) are going to be big areas of focus for us. Also, we will bring in cognitive areas for network diagnostics and management as data explosion takes shape. We are going to move the pie,” Bajwa added.

Slowdown in the telecom segment is also said to have impacted the India business of IBM. According to a registrar of companies filing (sourced from data intelligence platform Paper.vc), the company's total income on a consolidated basis declined by around 14 per cent to Rs 279.2 billion in FY18 from Rs 325.5 bn the previous year. Total profit for the period fell 54 per cent to Rs  27.8 bn, as against Rs 61.6 bn reported in FY17.

"Short-term pain exists like any other player (with exposure to the telecom sector)," Bajwa said.

IBM India also deep engagements with several banking and finance companies, as well as government agencies. Large banks it works with include State Bank of India, Bank of Baroda (BoB) and Canara Bank. For BoB, the company has built a centre of excellence for supporting various digital banking products. IBM India also offers services to the insurance and industrial sectors. 

In the government business, it is working with the tax authorities on fraud management.  

India is also the biggest personnel base for IBM, with an estimated 130,000 employees at its various centres.