Bengaluru: IBM Corp. is expected to complete the spin-off of its managed infrastructure services unit as a separate public company by 2021-end. While IBM will continue to focus on hybrid cloud and artificial intelligence (AI), the new entity, currently called NewCo, will focus on infrastructure modernization and service delivery. With up to one-fourth of India employees expected to be part of NewCo, IBM India is gearing up for the transition. In an interview, Sandip Patel, MD, IBM India/South Asia, spoke about the company’s strategy for this year, India’s role in IBM’s global agenda and drivers of growth. Edited excerpts:
Where does IBM India stand in the spin-off process?
From day one of the spin-off, shareholders of IBM will be the shareholders of NewCo which will be the market leader in managed infrastructure services. The whole notion is to establish two entities with business models that are relevant for the services the market is looking for. From day one, IBM will be NewCo’s largest customer and NewCo will be IBM’s largest partner. We expect the spin-off to be completed by the end of 2021 and throughout this year, we will continue to invest in NewCo to ensure we maintain our leadership position. As we work through the details, we are focused on staying essential to our clients in driving this digital transformation. We are also discussing and keeping our clients updated on how this is moving forward. Because there is a large employee population in India, there is a lot of excitement among them about the opportunities ahead. Just as Martin Schroeter has been named CEO of NewCo, other leadership appointments will be announced in due course.
What’s the strategy for 2021 during the transition phase?
We have always believed that hybrid cloud is where the world is moving to. It’s a $1 trillion market opportunity and only about 20-25% of the workloads have actually moved to any form of cloud and the bulk of the mission-critical workloads are still to go. So the focus is on continuing our journey to help our clients be successful in their digitization journeys by moving to hybrid cloud, data and AI.
There are three specific domains we are pivoting to as a strategy for 2021. First, we will be driving a lot more of a ‘One IBM’ kind of a simplified approach wherein we will be going to market with a very tightly integrated one IBM story with much tighter integration with Red Hat technologies. Second, it’s about execution and we are aggressively doubling down on elevating our ecosystem of partners. In August 2020, IBM committed $1 billion into the cloud ecosystem initiative over the next three years. The third piece is about bringing a new model of engagement to accelerate digital transformation as clients want to invest in structured innovation programs to meet the pace of today’s growth. That will enable us to create highly experiential journeys for our clients both digitally and through ‘garages’ that we co-create and co-invest with clients.
What is driving the growth of IBM’s hybrid cloud offerings in India?
IBM India is the microcosm of IBM. IBM is powering essential services in India and leading the ‘make in India, for the world’ agenda with our global delivery strength. Industry wise, financial services is a key focus as both public and private sector banks are now starting their journey towards the cloud. SBI is one such customer. Telecommunications has always been a strong focus, particularly with Bharti Airtel and Vodafone Idea, where we are actually instantiating the notion of a vertically integrated hybrid cloud for them which actually enables them to build efficiencies and prepares them for 5G and edge computing. The third area is industrial/consumer sector which includes large customers like Maruti, Honda, Indian Oil Corporation, Amul, Mother Dairy, and others with whom we continue working on their journey to hybrid cloud, data, and AI.
As IBM India is the highest contributor of patents globally, what kind of innovation is being driven out of here?
IBM received 9,130 US patents in 2020, marking 28 consecutive years of patent leadership. With 930 patents granted to employee inventors from India, IBM India is the second highest contributor to the global tally after US. The work that happens here is part of our global mission. Our India labs work with global teams to drive a lot of original research in close collaboration with clients. For instance, IBM India research team is working on neuro symbolic AI to make more efficient AI models. The other areas that we are looking at are climate resiliency, carbon responsibility, etc. We have also been doing a fair bit of work with some Indian Institutes of Technology (IITs) in the field of quantum computing.
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