IBM India’s technology services business is witnessing a shift in client spending from traditional IT outsourcing work to digital transformation projects. Services, comprising global business services and global technology services, contribute about half of IBM’s totalrevenue.
“Spending has shifted from keeping the lights on (traditional IT outsourcing) to driving revenue growth. Conventional IT spend in traditional areas is down but spend in transformational work is increasing. Automation, cloud, digital, hybrid IT, and security are the five key areas where we see strong growth,” Lingraju Sawkar, vice-president and general manager, Global Technology Services, IBM India, said in an interview.
Clients are moving to the cloud because of the desired flexibility, agility, and the ability to modernise infrastructure that the cloud offers, he said.
“They are looking at ways to do business that keeps their current spend constant or reduces spending, so that they can invest that money 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, Sawkar said. “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, distribution (retail), and industrial (including manufacturing and automotive).
In the automotive sector, IBM India is co-creating digital projects such as infrastructure modernisation and connected cars with clients such as Volvo, Honda, and Fiat. In the telecom sector, where IBM India is working with 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. It acquired Softlayer for its cloud capabilities in 2013. It acquired Sanovi Technologies in 2016 to strengthen its disaster recovery strategy. Other companies IBM acquired include Gravitant, for its technological capability of managing multiple cloud environment, and most recently RedHat, for its open source software. “As IBM morphed from being merely hardware services to a cloud and cognitive company, capabilities such as those of RedHat bring a very significant value in that area,” Sawkar said.