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August 27, 1997


IBM Global Services India launched

Tata Industries Limited and IBM Corporation have launched a new company called IBM Global Services India Private Limited to be headquartered in Bangalore.

Speaking to reporters in Bangalore on Monday, Tata Industries Chairman Ratan Tata said "The new venture will give a thrust to the information technology services business in India."

The company will have an equity base of $25 million in which IBM will have a stake of 80 per cent followed by Tata-IBM (10 per cent) and Tata Industries Limited (10 per cent).

The company will offer an entire range of services from IBM, including networking services, outsourcing, education, system integration, consulting, software development and hardware design.

Ratan Tata said "We have great satisfaction in being involved in the resurrection of IBM in India by bringing it back through the Tata-IBM joint venture."

He said IBM is to refocus on the growth of IT services in India and it is appropriate "To create a new entity rather than bring it under the existing joint venture - Tata-IBM."

IBM Global Services will bring IBM's experience, technology and methodologies in IT services into the country. The company will also provide services on IBM as well as on non-IBM products and platforms.

He said the future will belong to companies with established core competencies and only such companies will emerge leaders in this highly competitive environment. In this context, the IT services market in the country would be best addressed by the new company which will link up with IBM Global Services' operations worldwide.

Replying to a query on why Tata-IBM is making losses, Tata said that it has "To be examined whether it is due to mismanagement or factors other than that." He added that "Enormous investments had been made in building human resource capabilities in Tata-IBM. Mistakes and misjudgements are also made in how we saw the market." He added that "A few years is too short a time in the life of a company."

According to Ravi Marwaha, managing director, Tata-IBM and IBM Global Services, though the services business is being taken out of Tata-IBM, "There would be no change for our customers and partners as their current interface with Tata-IBM will continue. This will ensure continuity in our relationships."

Both Tata-IBM and IBM Global Services will have a common management, administration and human resources, he said. Marwaha, however, refused to comment on when the company is expected to turn around.

According to George Samenuk, general manager, IBM Asean/South Asia, "Services contributed almost 30 per cent of IBM's revenues in 1996. IBM Global Services India will be able to leverage this strength to reach out to more customers and deliver better services."

- Compiled from the Indian media

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