IBM to Double Consulting Staff in China

By Michael Wei and Simon Rabinovitch

BEIJING (Reuters) – IBM (IBM.N) plans to double the size of its new consulting team in China to help a growing number of firms that want to emerge from the global economic crisis stronger and more international.

Frank Kern, president of Global Business Services (GBS), IBM’s consulting arm, told Reuters in an interview on Monday that the new China Analytics Solution Center would help Chinese businesses that are interested in making acquisitions at home and abroad.

The center will initially will be staffed with 300 consultants, software specialists and mathematicians.

The company plans to increase the staff to 600 as demand grows, Kerns said at the opening ceremony for the center. He did not give a specific target date, but said the expansion would occur within a "reasonable timeframe."

"As companies look to get more productive, to compete globally, to be world-class, we do see more and more opportunities for the consulting business," said Kern, who oversaw IBM’s business in Asia Pacific region between 2003 and 2008.

IBM has been working with some Chinese clients, such as COSCO Logistics, to help them transform their business, Kern said.

FOCUS SHIFT

IBM, which last month announced a $1.2 billion plan to buy business analytics firm SPSS Inc (SPSS.O), has shifted its focus from hardware to software and services over the past decade.

It posted an 11 percent rise in second-quarter net profit and sharply raised its full-year earnings forecast thanks to its higher-margin businesses in software and services.

There are similar centers in Berlin and Tokyo, and another three analytics centers are set to open soon — in London, New York and Washington — and IBM plans to hire a total of 4,000 consultants for these offices.

Revenue from GBS accounts for roughly 20 percent of the Armonk, New York-based firm’s total earnings last year, GBS chief Kern said.

GBS and IBM’s software unit together form its analytics business, which is expected to see double-digit growth despite the weak economy.

IBM is also benefiting from a more general increase in demand for consulting services as companies that have weathered the recession begin to think about how to position themselves for the recovery, Kern said.

"We are seeing now a lot of clients asking for advice and work on business models, on transformations, on how to create a new model for the future," he said.

"As the world improves, it’s going to be a different world, it’s going to be more competitive."

(Editing by Karen Foster)