IBM India Sees Uptick In Spending In Digital Transformation Projects

IBM India’s technology services business is witnessing a shift in client spending from traditional IT outsourcing work to digital transformation projects. IBM services, comprising global business services and global technology services, contribute about 50% to IBM’s total revenue.

“Spending has shifted from keeping the lights on (traditional IT outsourcing) to drive revenue growth. Conventional IT spend in traditional areas is down but spend in transformational work is increasing,” Lingaraju Sawkar, vice-president and general manager, Global Technology Services, IBM India said in an interview. “Automation, cloud, digital, hybrid IT, and security are the five key areas where we see strong growth.”

Clients are moving fast towards cloud because of the desired flexibility, agility, and the ability to modernise the infrastructure that cloud offers, Sawkar said. “They are looking at ways to do business which either keeps their current spend constant, or reduce the spending and use that amount to invest in new technology.”

Sawkar said spending in digital technology is definitely going up and most customers are spending in newer areas and moving directly to the cloud. “We are very bullish about the technology environment in India. The whole innovation cycle with startups and in-house ecosystems of technology providers are sort of fuelling the growth,” he said.

The primary areas of focus for IBM India are banking and financial services, telecom, and distribution (retail) and industrial (including manufacturing and automotive).

In the automotive sector, IBM India is co-creating digital projects like infrastructure modernisation and connected cars with clients such as Volvo, Honda Motor Company, and Fiat Automobiles. In the telecom sector, where IBM India is working customers such as Vodafone, clients are spending in areas of telecom network modernisation and network cloud.

IBM has been acquiring digital capabilities gradually through acquisitions over the past few years. For instance, in 2013 it acquired Softlayer for its cloud capabilities. It acquired Sanovi Technologies in 2016 to strengthen its disaster recovery strategy.

Some other notable companies IBM acquired are Gravitant, for its technological capability of managing multiple cloud environment, and most recently RedHat for its open source software. “Acquisitions not just enrich the portfolio of IBM, they most importantly help look at what could lead to client transformation. As IBM morphed from being merely hardware services to cloud and cognitive company, capabilities like RedHat bring a very significant value in that area,” Sawkar said.

For the third quarter ended September, IBM’s cloud and cognitive software (including Red Hat) revenues were up 6.4% at $5.3 billion, led by security, internet of things, data and artificial intelligence platforms and hybrid cloud.―Livemint