In November last year, technology major IBM completed the separation of its managed infrastructure services business to Kyndryl. Today, IBM and Kyndryl are each other’s biggest clients and strategic partners. Both companies are betting on India’s growing hybrid cloud opportunity. Sandip Patel, managing director for IBM India/South Asia, in an interview with Ayushman Baruah, talks about the synergies with Kyndryl, the growth drivers, and the opportunities. Excerpts:
After Kyndryl’s spin off, how has IBM grown in its software and consulting business?
We have taken decisive action and made strategic investments over the last couple of years to execute a platform-centric, hybrid cloud, and AI (artificial intelligence) strategy. Today’s IBM is more focused, faster-growing and a higher-value company. We have invested in developing newer offerings, technical talent, our ecosystem, and go-to-market model. The efficacy of this effort is clearly visible as we delivered robust results for the first half of FY22, and we continue to see constant currency revenue growth at the high end of mid-single digits for the full year.
What about the growth of IBM Consulting?
In Q2 FY22, we had double digit performance in IBM Consulting, broad-based strength in software, and with the z16 platform launch, our infrastructure business had a good quarter. The software business revenue grew 12% driven by our hybrid cloud and AI capabilities. We saw growth across Red Hat, automation, data and AI, and security solutions. On the consulting side, we saw double-digit revenue growth across all business lines and geographies. Our revenue increased by 18% compared to 8% growth a year ago.
What are the factors driving this growth, globally and in India?
In the current business environment, almost every business leader we speak to believes that technology serves as a fundamental source of competitive advantage. It is especially critical as clients across industries face challenges on multiple fronts, from global disruptions like the pandemic to demographic shifts in a digitally pervasive world. A strategic approach to adopting IT has become a top priority given its ability to boost innovation, productivity, resilience, and help organizations scale. In India, we are seeing businesses committing fully to digital and undertaking critical business transformation projects that are underpinned by the hybrid cloud, data, AI, and security as core technologies. Clients in India and across the world are now modernizing applications, moving more workloads to the cloud, and automating processes across the board. This is one of the key factors driving growth for our technology and services.
What is the hybrid cloud opportunity in India?
Indian organisations are experiencing enterprise-scale improvements by deploying hybrid cloud architecture to digitise their existing products and services, enhance customer experience, increase business resiliency, and reduce security risks. In fact, our IBM Institute for Business Value (IBV) study in 2021 found that 99% of organizations in India are already using a varied combination of hybrid cloud architecture. Therefore, it would be fair to expect that the demand for hybrid cloud will only grow in the coming years as these organizations mature in their cloud journey. As part of our global strategy of which India is a key market, IBM is laser focused on the global $1 trillion hybrid cloud opportunity by investing in open innovation and security to support mission critical workloads.
How are the synergies between IBM and Kyndryl working out?
IBM and Kyndryl are each other’s biggest client and one of each other’s key strategic partners. The joint business of IBM and Kyndryl will continue to grow in India as clients benefit from the added degree of focus that each company will bring as we redouble our effort toward customer innovation, responsiveness and attentiveness. An example is our work with Bengaluru International Airport Ltd as part of a ten-year partnership under which IBM and Kyndryl will provide best-of-breed IT solutions to create a new ‘Airport in a Box’ platform that will transform the end-to-end travel experience for passengers at the airport.