The rapidly changing technology makes it difficult for companies to be kept up to date with new process and advancements made. IBM has taken a leading role as a business process outsourcer and business transformation outsourcer. They have added value and managed business processes for companies located worldwide. With leading processes and lowest cost arbitrage they can successfully lead their industry by acquiring growing companies and continuously improving their processes.
Can IBM successfully manage the acquisition of Daksh to achieve its on demand strategy?
1. IBM’s presence as a leader in providing end-to-end services
2. Improving BPO and trying to encourage customers to get BTO ...view middle of the document...
Instead of battling in the market, IBM takes advantage of existing markets to regain its position in the industry. The creation of IGS marked the idea to selling solutions rather than products, was the new strategy. In order to realign itself, IBM needed to have a presence in high end consulting and have a low cost base for operating technology services. They did this by acquiring Pricewaterhouse Coopers. This added thirty thousand consultants, which allowed them to bid aggressively for high end consulting projects. Also, IBM went into Brazil, China, India, and Russia to offer solutions at competitive prices. IGS then created a new operating model. In 2006, they adopted two organizational names, Global technology services and Global business services. The GTS included infrastructure services, standardization and automation, outsourcing services, integrated technology and maintenance. The GBS includes consulting, systems integration and application management services. In 2004, IBM missed its revenue target. They cut 14, 500 jobs from Europe and added 15, 550 to India. The strategy for growth in India was, on demand computing and emerging markets. India, which had many IT graduates, programmers, and developed offshoring capabilities can greatly add value to IBM’s global strategy. India was ahead of Russia, Brazil, and China and was noted that its geography rather than technology was identified as an opportunity.
In march 2004, IBM acquired Bharti Tele-Ventures for $750 million USD, a month before acquiring Daksh. Continuing its expansion, IBM was the leading multinational company and fourth largest IT Company in India. IBM planned to invest $6 billion USD by the year 2006 in India. They wanted to take advantage of this opportunity in India and become a globally integrated company.
IBM had a competitive advantage over competitors because of its size. IBM had revenues of $47.36 billion USD while its next closest competitor EDS had revenues of $19.36 billion USD (Exhibit 1). IBM vision to offer end-to-end services, including back and front operations on a global scale was become real. Another acquisition was Sprint, which was to manage its customer service processes and operations globally. For IBM, on demand described a company’s behavior and operating strategy in the networked economy. The demand strategy offered solutions to clients through its managed business processes services (MBPS). Including BPO and BTO services, it also included asset based offerings that were focused on mid, small, and medium businesses. It was to improve segmentation of target clients, manage business processes and develop applications on demand.
The top three leading multinational companies in India were Tata Consulting Services, Wipro Technologies, and Infosys Technologies. IBM Daksh was ranked as the second largest BPO provider in India. Two of IBM’s largest competitors had also outsourced to India. Accenture had 25,000 employees and eight facilities in India....