Kyndryl, the spin-off of IBM’s managed infrastructure services business, made its debut as an independent entity on the NYSE in November 2021. The company is now focussing on execution and new revenue streams to achieve profitable growth. Lingraju Sawkar, president, Kyndryl India, talks about the growth strategy, India business, and the demand for managed services, in an interview with Ayushman Baruah. Excerpts.
In Q3, Kyndryl reported a net loss of $106 million. What is your strategy to become profitable and by when?
Our transformation is well under way. The essential non-discretionary nature of our business provides our revenue streams with some natural insulation to macro factors. As a result, demand for our services remains stable across the markets we serve. Our continued execution on our three As — Alliances, Accounts and Advanced Delivery — is delivering the benefits we need to strengthen our overall business performance, driving us toward profitable growth and putting us on track to deliver on our fiscal 2023 milestones. In the first nine months of this fiscal, we generated $750 million of hyperscaler signings, putting us right on track to achieve our $1 billion in one year target for our Alliances initiative. The number of customer contracts that now include a hyperscaler-related component has tripled since the start of our fiscal year (Kyndryl follows an April-March fiscal).
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And the other two initiatives?
Yes, our Advanced Delivery initiative has freed up over 4,500 delivery professionals this year to backfill attrition or address new revenue opportunities. At the same time, it is generating annualised savings of more than $225 million, already surpassing our $200 million FY23 year-end objective. And in our Accounts initiative, we are addressing elements of our business with substandard margins. In many cases, we are driving margin growth by expanding the scope of work and optimising our cost base through automation and greater standardisation. We are now realising pre-tax benefits of more than $130 million a year and progressing toward our $200 million year-end run rate goal.
What is your focus on India in terms of market opportunity and talent?
As the world’s fastest-growing economy, India has targeted to hit the $5 trillion economy benchmark by 2025. India is in the top 10 of the 63 countries in which Kyndryl operates and about one-third of our workforce is based in India. Kyndryl serves more than 215 India-based customers, and from India delivers solutions for more than 700 more worldwide. India’s demographic dividend offers a unique opportunity to rewire the global economy for progress and that will depend on its ability to build a strong tech workforce. Kyndryl plays an important role in helping India achieve this by providing its expertise and experience to create a skilled workforce that can build in India, for India and the world…We continue to invest in certifying our employees to work with the cloud hyperscalers — Microsoft, AWS, and Google Cloud — on top of our pre-existing IBM cloud certifications.
How are you pushing customers to invest in managed infrastructure services?
We are the world’s largest pure-play IT infrastructure services provider. We employ nearly 90,000 people, operate in over 60 countries, and serve thousands of customers across sectors and industries. Enterprises have started using emerging technologies to enable business growth, but it’s invariably deployed to tackle immediate infrastructure challenges rather than building a strong environment that opens new growth avenues. So while managing infrastructure is critical, making the IT environment future-ready and resilient to meet potential disruptions is even more important. Kyndryl addresses this growing market through our array of practices and service offerings in areas such as cloud, automation, AIOps, cybersecurity, and data analytics.
Do you see a cut in client budget due to the macro-economic uncertainties?
As a technology partner to businesses and governments around the world, we build, run, and operate mission-critical systems and processes for our customers, which helps them stay efficient throughout the year and even in uncertain conditions. We also partner with them to optimise their operations so that they can best serve their customers and simultaneously deal with business challenges. Kyndryl is capable of building and managing sophisticated multiple IT environments with cybersecurity, business continuity and disaster recovery built-in to make it resilient to unprecedented risks and challenges like the Covid-19 pandemic. It’s our focus on progress combined with the essential nature of our business to our customers that helps us to drive toward profitable growth.