BANGALORE: A decade after IBM put India at the core of its global strategy for software services, by building an army of engineers, the company is shedding staff, scaling down investments and even shuffling the top leadership in the country. Already, from around 1.65 lakh employees on its payroll by 2011, IBM's India headcount has now fallen to around 1.13 lakh and set to slide to 1 lakh by March 2015, according to people familiar with the company's plans.IBM India managing director Vanitha Narayanan, who relocated from the United States in January last year, is planning to return as part of a major organisational rejig. "IBM is looking to rationalise high cost executives assigned across the markets and bring them back to the US," a source said."Such executives cost anywhere between $7,00,00 and over $1 million annually, apart from local country market costs," he added. Another person familiar with the developments added that Narayanan's possible return to the US has "nothing to do with India performance, but a part of global realignment of senior resources."IBM India said in a statement that it "continues to invest in India" and that it has "more than 3,000 open positions" for jobs in the company. "Narayanan continues to lead India (and) the rumour (about her move to the US) is completely unfounded," according to IBM.As IBM attempts to script another turnaround in over a century of its existence, lowcost software services are no more the silver bullet that helped it come out of "a neardeath experience" in the late nineties. With aggressive disruptors such as Amazon and Google, cloud computing is the new battlefront, threatening models that rely on low-cost labour.And that explains the shift in IBM's priorities, company insiders said."India is important, but not critical to IBM's survival like the time when Sam Palmisano brought entire board of the company to Bangalore in 2004," said a person familiar with the changes. "Things are looking quite different from 2011 — I now see half-empty floors, paid parking slots and no free coffee at times," said an IBM employee.Now, software robots from companies such as IPSoft, and IBM's very own Watson, are being applied to automate projects, reducing dependence on engineers and support staff. Already, IBM has an internal project called 'Dynamic Automation' that is aimed at reducing dependency on human engineers by deploying software robots and automation tools. What IBM is doing is not surprising, said Rishikesha Krishnan, director and professor of strategy at Indian Institute of Management-Indore."IBM got into plain vanilla services rather late and that has pretty much run its course now. So they have to find a new business model," he said. The trend away from labour-intensive software services is the biggest driver for top MNCs including IBM to be looking elsewhere for talent.Vinnie Mirchandani, a former Gartner analyst and CEO of boutique advisory firm Deal Architect, said companies such as IBM are looking to build newer talent teams in regions beyond India. "In areas like social marketing, security, mobile app development, IBM and other firms are developing talent pools in newer global regions and so are not as dependent on India," Mirchandani said.Earlier this month, sales at Big Blue fell short of analysts' expectations as its legacy businesses start to slow down while the company's CEO Ginni Rometty pushes ahead with a strategy to improve margins. IBM's revenue fell for the tenth consecutive quarter in the third quarter of 2014 (ended September) to $22.4 billion.In India, the company was embroiled in allegations of fraud, following which its contract with India's largest telecom company Bharti Airtel was renegotiated.For its part, IBM has signed some new contracts in the past year in India and Narayanan's tenure has seen its bright sparks. In July, IBM closed a Rs 550-crore deal with microfinance firm Janalakshmi Financial Services. For the first time, IBM is also setting up a cloud data centre in India. The new centre will be a part of 15 new IBM cloud centres that will come up across the world.But all this is yet to make up for the lost momentum IBM had few years ago in India's outsourcing market when it rode a fresh wave of outsourcing by the country's growing telecom companies. Indeed, IBM India's revenue for the year ending March 2013 rose by 12% to $3.2 billion, but profit fell 20% for the same period (fromRs 1,520.8 crore to 1,218.2 crore).Meanwhile, Indian IT services companies such as Wipro have also started on a journey to become leaner. ET reported in September that the company which has 1.46 lakh employees is aiming to slim its workforce down by a third by focusing on automation.Behind this realignment of payrolls is a growing trend of doing more with less. For instance, Indian IT companies only added 13,000 employees for every billion dollars of revenue in the 12 months to March 2014 as against 26,500 employees the year ago, according to Nasscom. "IBM is shrinking workforces not just in India," Mirchandani said.