IBM sees traction in Indian steel segment

Global technology company IBM is focussing on the Indian steel market as a growth driver and is offering solutions and services to steel majors like Ispat, Bokaro, Jindal companies and Tata Steel in the country. With a lot of activity happening in the infrastructure sector and integrated power plants, the power utilities sector is growing and IBM is finding this sector bullish.

For instance, it recently completed its first engagement with Jindal Steel and Power (JSPL) wherein it implemented SAP for standardisation of processes at the steel firm’s 19 locations . “At present, IBM is offering us extended support as the implementation part is over. The extended support period is for 6 months,” said S K Agarwal, Senior VP, JSPL. The company has invested $6-7 million (Rs 28-33 crore) on the deployment of the solution, infrastructure and maintenance. It is also in talks with IBM for its supplier relationship management solution besides other add-on models.

The contribution of metals in IBM’s revenues has increased and it is currently talking to 6-7 clients in the vertical. "The market is quite promising today a s right now, clients are showing interest in considering certain projects. The nature of our engagement with the steel clients ranges from emergency troubleshooting and simple technical support to consulting services, IT strategy and supply chain re-engineering. In fact, our client base in the steel segment has doubled over the last four years. So, the environment is looking positive for this sector," Sivaramakrishnan Narayanan, Partner - Industrial Sector, Global Business Services, IBM told Business Standard .

The company explained that clients were not committing to consulting and IT services between September 2008 and February 2009 and there was a lack of willingness but now, discussions are happening. In fact, the company sees steel and metals vertical to be a cash flow and growth driver as core infrastructure and metal companies like copper and aluminium are growing. Indian clients fix their budgets by February-March and IBM signs deals spanning 9-12 months for large clients that it defines as having more than Rs 5,000 crore in turnover. For small clients, the time frame is 6-7 months.

Moreover, IBM has also developed a steel template that catches the uniqueness of the steel industry and is then customised for each client.