Arvind Krishna, who took over the top job at IBM earlier this year, said he does not expect the separation to have a material impact on the India operations.
“Yes, we will have two entities in India at the end of this, but that is going to take a year to play out. And, I would expect that both people will find aplace in one or the other.” Krishna added that IBM’s current India managing director Sandip Patel will continue to head one entity, while it will look for another person to head the other. The business focussed on hybrid cloud and artificial intelligence will be known as IBM, but the other entity’s name has yet to be finalised – which will be a managed infrastructure services company.
After getting regulatory approvals, the new structure is likely to come into force by the second half of next year, including in India, Krishna said. “IBM is an innovation-based company that has a maniacal focus on hybrid cloud, and AI. There is a trillion-dollar addressable market that’s created by hybrid cloud. We know that client’s digitisation journeys are accelerated by Covid-19, but that’s the trigger and not the cause. Clients are down this path already… But the opportunity is now,” he said.
The reason for the spinoff was to focus more on the individual companies. “Focus normally allows for a better utilisation of capital, a better allocation of skills, and acquisition of the right companies that helps the purpose of each of the two companies. So, this really is about creating extreme focus in the two companies that exist,” Krishna said.
He added that buying decisions by clients for cloud services and other infrastructure services are being done separately. “Twenty years ago, those were probably made together, but not today. And so, we got to go separate in our company’s approach,” he said.