The two erstwhile partners have decided to forge an alliance to market integrated voice recognition systems (IVRS) developed by the information technology division of Tata group auto major Telco, which has been hived off into a separate company, Speech & Software Technologies (India).

IBM may also pick up a sizeable stake in the new company and it is learnt that IBM is eyeing a 50 per cent stake in the venture.

Though sources confirmed that the new company was seeking a strategic partner, they added it was too premature to talk of the probable partners at this stage.

The division, along with subsidiary Tata Technologies, used to provide Telco with its IT requirements and is being hived off as part of the auto company's strategy to strengthen its corecompetencies.

On July 2 this year, the Tatas and IBM formally announced the formers plan of exiting Tata-IBM, the hardware venture formed in the early 1990s. IBM, the world's largest infotech company which had forged two joint ventures with the Tata group, were to buy out the latter at an undisclosed price.

The Tata decision was part of a plan to stay only in software and related areas, and get out of all hardware operations.

The IVRS product, an Indian English version of its speech recognition software Via Voice 98, will be marketed by Tata IBM. The software enables voice-implemented desktop navigation, dictation of popular applications, spreadsheet building, and others.

The software's eventual application would go much further in embedded technology for products such as telephones, calculators, digital diaries, etc.

The Tata group had said at the time of the split that the divestment of the Tata stake in Tata-IBM and IBM Global Services India in favour of IBM World Trade Corporation has been takenunder a mutual arrangement between the two partners as part of a reorganisation in the ownership patterns in the two companies.

The Tatas had held 50 per cent in Tata-IBM, formerly Tata Information Systems Ltd, and a 10 per cent stake in IBM Global Services India through Tata Industries.

The Tatas will, however, continue to hold a token one per cent equity in Tata IBM in view of the long-standing partnership with IBM, Tata IBM officials said. The new shareholding structure will come into effect once IBM obtains the approval from the government of India, which will also see a change in the name of Tata IBM.

INSIGHT
Value of Tatas IT ventures still to be unlocked

The Tata group has an exposure to IT through various entities of which Tata Consultancy Services is undoubtedly the largest. Tata Infotech, which is listed, is involved not only in software development but also in marketing of products and IT training. Telco's IT division was virtually as large as any average-sized softwarecompany in India. The decision to hive off the division as a subsidiary and the possibility of a joint venture with IBM will help unlock the hidden value of the division. It will also help Telco to concentrate on its core activities. However, at the group level, value of the IT ventures is still to be unlocked. Perhaps the best way to do so is to create a holding company for IT services and consolidate all IT related activities under a common umbrella.

-- Sarad Saraf