A business magazine had an interesting article recently that raised some pertinent questions about the nationalism of multi national companies and where do their core interests lie, given today’s globalized world.
Most of us are already familiar with the Accenture controversy regarding this. Even tough Accenture is considered a blue eyed US tech services company in popular perception, the company is actually incorporated in Bermuda. Basically a tax haven country which helped the company save big time in corporate taxes.
IBM is based in Armonk, US, but it employs more people outside US, and a substantial chunk of them in India. India is IBM’s hub for global delivery of software solutions template and it has about 80,000 IBMers on its payroll in this south Asian country.
TCS, based in Mumbai, India is the nation’s largest tech services company. It gets more than half of its total revenue (about 51%) from the North American region. Leaves no doubt about where its energies are focused even though its based more than 6000 miles away from its core market.
Not surprisingly, IBM gets a bigger share of its revenue from markets outside of US and has seen its bottom line improving even though the US is witnessing an economic gloom and doom of sorts. Its stock initially rose 3% and then by 25% since mid-February.
On the other hand, TCS witnessed a slight slide in its fortunes, its stock is down by around 10%. Putting all their big eggs in one market is going to make these companies vulnerable. Note, TCS is also one of tech India’s most geographically diversified company. Others are banking on US for almost 60 to 70% of their revenues.
But the situation is not that bad for Indian tech companies. With the US economy already in doldrums or veering close to it, depending on whom you believe, US is going to outsource-offshore more to cut costs and improve the bottom line. But at the same time, Indian companies should work on raising the bar and getting a better traction in the emerging markets like China, Russia, Mexico, Brazil etc.
IBM is now the numero uno seller of tech services in India, where its revenue grew by 41% in the last quarter.
American tech service have not only mastered the art of outsourcing but also beat their Indian compatriots it seems.