IBM finds huge business in used IT equipment

If you are not very sure of what to do with those old outdated computers, networking equipment and ageing servers in your company, you have an easy customer who can buy all those. The customer is IT major IBM’s finance arm, IBM Global Finance.It’s a big opportunity for Big Blue as the demand for financing used equipment is rapidly rising.  Once IBM buys your used IT hardware, it then sells the same under used equipment financing. Financing of used equipment, one among the three lines of business of IBM Global Finance, contributes 40% of IBM Global Finance’s revenues. The other two business lines are lease and loan for IT-based equipment and short-term loan for IT-based businesses. The IT firm’s finance division can put many major banks to shame given its asset base of about $38 billion worldwide.

The revival in IT procurement by companies is fueling the demand for financing used equipment. Global research data from IDC and others have indicated the rebound in IT spending by firms globally. The demand from companies is to turn fixed costs into monthly payments and put financial resources for core business activity.

In calendar year 2010, PC makers sold 34.5 crore units, up from 30.2 crore units in 2009, increasing at a year on year growth rate of 14.2 percent.

Meanwhile, in India, IBM Global Finance’s business is seeing growth between 10-20% year on year since last five years. The company has seen demand for financing options rising from small and medium businesses in India. To meet the demand for not just used IT equipment but software as well, IBM Global Finance India has devised financing plans for lease or loan for IBM or non-IBM hardware, software and services at low rates of financing options. The interest rates are charged depending on factors such as credit risk of a firm, type of product or services on which financing is sought etc.