IBM says India biz did well in Covid-hit quarter

BENGALURU: India was one of the standout countries in terms of revenue growth for IBM in the second quarter, a quarter in which the company’s topline dropped 5% as clients cut back on IT spends and projects took longer to fructify on account of the pandemic.
“Around the world, there were several positive revenue performances, including from countries like Brazil, France, Spain and India, which were all hit hard with Covid-19,” CEO Arvind Krishna said in an internal email to employees.
IBM’s total revenue during the quarter was about $18 billion compared to $19 billion in the same period last year. Net profit, however, plummeted 45% to $1.4 billion due to higher expenses. While IBM does not call out revenue per country, India – which houses more than 1 lakh of its employees – was the only country to perform better in the Asia Pacific zone, where revenue overall fell 4%.
IBM has been focusing on cloud computing at the cost of its legacy businesses. It brings more margins and profit.
“From a big picture perspective, Covid-19 related challenges are presenting IBM both headwinds and tailwinds, accelerating the cannibalisation of the company’s legacy-based software and services businesses (roughly 70% of run rate), while also boosting demand for its cloud-based offerings,” Wedbush analyst Moshe Katri said.
IBM’s cloud revenue in the second quarter was up 3% to $5.7 billion while its other major verticals – global business services and global technology services – fell. Total cloud revenue over the last 12 months is $23.5 billion, which now makes up about 30% of the total revenue.
“Enterprises like Bharti Airtel, Vodafone, American Express have chosen us to accelerate their hybrid cloud journey. We are also working with major system integrators like Infosys, Wipro and TCS to implement IBM’s hybrid cloud platform,” Krishna said.
He said only 20% of the workloads have moved to the cloud. “The other 80% are mission-critical workloads that are far more difficult to move. There is a massive opportunity in front of us to capture these workloads,” he said in the investor call.

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