Monday, December 6

IBM splits its infrastructure business and creates Kyndryl, the new digital giant

Kyndryl began trading this Thursday on the New York Stock Exchange as “the largest startup in the world.” Your first day as an independent company begins with 90,000 employees and $ 19 billion in annual turnover. They come out of the 78,000 million that IBM entered in 2020, which has decided to separate its digital infrastructure management business to scale beyond the technology designed by its parent company.

The new giant will be one of those companies little known to the general public but on which the digital society is based, with data services in the cloud, digitization of jobs, operations with artificial intelligence and cybersecurity. It controls 459 data centers serving 4,000 international customers in 60 countries. 50% of sales in supermarkets or 49% of mobile connections are made by companies that use their computer systems, as well as 61% of financial asset management.

Unbound by having to use IBM technology, Kyndryl estimates that its market will double. His forecast is to go from a potential business of 240,000 million dollars in 2021 to more than 500,000 million in 2024. “We will work with each client to recommend which provider is best for them. It could be IBM services, but also those of clouds from Google, Amazon or any other company, “Luis Roca, president of Kyndryl Iberia, explained at a press conference.

Kyndryl thus hopes to reverse the downward trend of his parent company. IBM has been losing revenue every year since 2011, when it peaked at $ 107 billion, with its competition cutting back more and more space.

Spain and Portugal, however, escape this downward trend. The two countries will make up one of Kyndryl’s first 13 strategic areas that will only report to the headquarters in New York and the company announces that it will expand its presence, making a hundred hires before the end of the year. “Spain is one of the most strategic and key markets in our growth”, declares Roca.

In Spain, about 250 companies use Kyndryl’s digital infrastructure management, among which is “45% of the Ibex 35 companies”, reveals its president, as well as institutions such as Social Security or the Generalitat de Catalunya. The separation does not affect the construction of three new data centers in Spain announced by IBM, which will continue to be managed by this company.

Internationally, Kyndryl does not expect to change IBM’s downward trend immediately, but expects to grow again after 2025. In addition to tapping into a larger potential market, it aims to attract companies that have not yet made the leap to business. digitization. “The traditional environment is going to move towards the cloud environment and we want to help them make that digital transition,” explained Roca.

IBM has divided the ownership of Kyndryl among its shareholders, at the rate of one share of the new company for every five shares of IBM. The distribution allows IBM to “temporarily” retain 20% of Kyndryl’s shares. The market has not reacted effusively to the spin-off, with IBM’s shares falling 5% in the first hour of trading and Kyndryl’s more than 1%.