This isn't your father's IBM. After decades of specializing as a computer manufacturer and provider of computer-related services, Big Blue in the past year or two has been heading into some not-terribly-technical fields. Today's IBM processes thousands of insurance claims, ensures that Procter & Gamble employees get paid, and takes charge of repairing televisions and CD players sold by Philips Consumer Electronics.
Taking on tasks such as customer service and human resources management is part of a broader shift among traditional information technology companies to get into what's often called business process outsourcing (BPO). BPO is a fertile market, expected to grow from about $405 billion last year to $682.5 billion in 2008, according to research firm IDC. Interest in such operations - and especially in their migration to countries such as India - continues to ride high. On November 19, for example, the Wharton India Economic Forum in Philadelphia has a panel devoted to discussing this phenomenon.
IBM CEO Sam Palmisano thinks the intersection of technology and business process services holds great promise. As he sees it, IBM is poised to help customers with a new set of services that includes technical assistance but adds strategic advice about business methods. Palmisano dubs the concept "business process transformational services," and claims it represents a massive market nearly a third as large as the $1.2 trillion spent annually on IT. "It is a $500 billion opportunity," he told analysts earlier this year. "We plan to exploit this opportunity to drive revenue and growth rates beyond those which are traditionally available in the information technology industry."
In essence, the new Big Blue sees big bucks in focusing on the "B" in International Business Machines. But the strategy carries some risks. They include competing against new foes, handling novel tasks and explaining a grandiose vision to customers.
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