In addition to expanding its international footprint, IBM (IBM) is also expanding domestic operations. The company has announced the opening of a services delivery center in the U.S.
The new facility will maintain, monitor and support computer hardware, software and manage IT services for IBM’s clients. The new center joins an extensive network of more than 80 IBM delivery centers worldwide.
For the new facility, IBM intends to hire up to 1,300 people by the end of 2010.
With an investment of $300 million in 2008, IBM built 13 Business Resilience service delivery centers in 10 countries, increasing its ability to address surging demand from businesses and governments from around the world seeking to keep their operations safe from disruption. IBM also plans to open a new collocation data center at its Greenock facility in Scotland and three new global delivery centers in Argentina.
To further bolster its presence in India, the company earlier opened a new Global Delivery Center (GDC) in Pune, India, which will act as the regional hub for IBM Tivoli service management software and strategy, and will provide clients with business consulting and application services.
We expect these centers to help increase revenue going forward. While IBM’s initiative to expand its footprint in both domestic and international markets has helped it to win a number of IT deals, the IT services business is becoming increasingly competitive. In particular, IBM is facing pricing pressure from Hewlett-Packard (HPQ), Sun Microsystems (JAVA), Intel Corporation (INTC) and Dell (DELL).
Despite this, we believe IBM’s new IT initiatives position the company for long term growth. Thus we maintain our Outperform rating on the stock.
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