?Firms are cautious about large spending?

Global Business Services (GBS), the management consulting, systems integration and applications outsourcing arm of IBM, is betting big on the Indian media and entertainment (M&E) sector. Steven Abraham, global leader for M&E industry at IBM GBS , in an interaction with FE?s Rachana Khanzode, said the firm was witnessing an increase in domestic deals in the below $100 million range from broadcasters, publishers and telecom operators. Globally, IBM serves clients like Disney, Sony, Time Warner, Newscorp, Google, NBC Universal, CCTV, BBC, Canal+, TV Globo, UTV, France Television, Pro Sieben and others. However, at the moment the firm is witnessing a cautious approach in IT spend from the US and European markets.

How are you tapping the M&E industry in India?

We are seeing technology adoption in the Indian M&E industry across two major areas. The back office services that involve finance and accounting, customer management, human resource management, customer development, support for sales processes and analytics. We are also finding increased adoption of digital supply chain management from production, distribution to content development. This is largely because the market was earlier fragmented but now it has started integrating. These large transformational deals are usually in the range of sub $100 million with a contract term of about 5-10 years. These are coming from broadcasters, publishers, telecom operators and online content providers. Currently, some of our clients in India are UTV, Zee, Sun, Sony and teleco’s like Bharti Airtel.

Do you see IT spending coming back in the M&E vertical?

During the economic slump the M&E industry did slow down on capital investments and were looking at improved efficiency leading to increased outsourcing. Though at the moment, we are seeing slow return of small capital investments, the firms are cautious about large spending. At the same time, they continue to look at cost reductions. In Europe, we have seen clients deferring on capital projects for almost two years because they couldn’t afford it. So firms are still under stress and the US is still recovering.

How are you dealing with the slump in the US and Europen markets?

At the moment, the adoption of back office services is becoming more prevalent in Europe and Asia. The US clients are huge in size, about $ 10-12 billion, and therefore the transformational work in this market is expensive and complicated as compared to Japan, Korea, Germany, UK and other markets. The size of the contracts are in $100 million. The US had adopted the back office services and outsourcing much before the Europe and Asia, but has been lacking in the digital supply chain management due to lack of compliance from the government. However, the government has put forward the mandates last year and therefore we see an opportunity there.