Infosys and IBM in India compared (rediff article)

Infosys versus IBM: Converging? is a good read to get a quick overview of the scenario about how IBM India compare. Key conclusions:

1. Overall, the gross profit margin of IBM stands at 40.6 per cent. But if one were to exclude the profit contribution from the products segment, IBM's global services margins stand at 25.2 per cent. This, when compared to Infosys' margin at 47.6 per cent, is definitely lower. While we expect Infosys' margins to decline in the future, the company is gradually moving up the value chain and to that extent the rate of decline will be slower.

2. While we are not sure whether $1 billion of revenues is 'the' threshold limit. Surely, it will enable Infosys to showcase its ability while bidding for larger contracts in the future. At the end of the day, the company already has a proven track record of delivering services for over 15 years now. So, the long-term growth prospects, from this perspective, are encouraging.

With recent $750 million 10-year deal from Bharati Televentures, IBM is definitely inching towards a top player. But Infosys, with its $1 billion revenues, will start competing at world level.

We could say that global competition has come home now. All the more pressure on "the very best performance" from companies in India.