IBM sees hybrid cloud as a $1 trillion market globally

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IBM sees hybrid cloud as a $1 trillion market globally

IBM sees hybrid cloud as a $1 trillion market globally, and organizations in India are likely to spend nearly half of their hybrid cloud budgets over the next three years, in an interview with its India managing director Sandip Patel.

This comes in the middle of the recently announced restructuring process by the US-based technology giant to break into two with a new arm focused only on hybrid cloud and artificial intelligence (AI).

Corporations expect an increasing number of suppliers to use cloud services by 2023, but only 29 percent of organizations have holistic plan for multi-cloud management. 

“This is the reason why the opportunity here is significant for the company,” Patel said.

Arvind Krishna, CEO of IBM, who will take over as chairman on January following the retirement of Ginni Rometty, said that the new structure is likely to enter into force by the second half of next year, including in India, after obtaining regulatory approvals.

Krishna also said the Covid-19 pandemic had accelerated the journey of customers to the Cloud and AI. Talking about the 2021 priorities, Patel said IBM would redouble its hybrid cloud bets by improving existing hybrid cloud capabilities, concentrating on the acquisitions of NewCo (the current IBM arm) and Red Hat.

“In 2021, we will accelerate our investments to ensure we have the right capabilities needed to develop the next generation of infrastructure services with industry-leading reliability, service, and efficiency. The spin-off will bring in focus and help us expand in India, aligned to India’s growth agenda,” said Patel.

‘Co-creation and co-innovation’ will be the key to future growth along with ecosystems that will be important to both NewCo and IBM, he said.

Recently, the company said it would spend $1 billion to further expand its hybrid cloud ecosystem, including incentives to build on the IBM open hybrid cloud platform for third-party software providers.

Wipro, Infosys, TCS, Tech Mahindra, and others are already working on this platform with IBM.

Shailesh Agarwal, VP of Strategy and Cloud Platform, IBM India, said the demand for infrastructure services in the country is worth around $10 billion, but it is a fragmented market.

While research indicates that IBM is a market leader with a market share of around 15 percent, Agarwal said the next player would have a market share of 6-7 percent.

“This fragmentation provides a lot of opportunities for players with scale to grow,” he added.

Over the past 12 months, IBM has already gained a sizeable cloud company of $24 billion globally, and it expanded 25 percent in the previous quarter.

It is estimated that NewCo will have 90,000 workers, and almost one-third or one-fourth of the India-based employees will move to the new organization.

However, Patel ruled on any rightsizing when the restructuring is complete.

 

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