Tough road ahead for IBM India chief

Varun Aggarwal Mumbai | Updated on January 12, 2018 Published on January 11, 2017

Rough ride IBM is taking a beating from both local and global competition in the public cloud space   -  REUTERS

Karan Bajwa, MD, IBM India

Tech major facing competition in cloud business, struggling with senior-level exits

IBM’s two major global bets — cloud and cognitive — are also the two weakest areas for the computing giant in India, where it seems to be struggling in a highly competitive market. Will the new India MD be able to get the company back on track?

A report from Greyhound Research says IBM is taking a beating from both local and global competition in the public cloud space with its offering Softlayer and its cloud platform Bluemix failing to attract enough takers.

The report says that while IBM is expected to continue with its growth momentum in FY17-18, it will largely be backed by just one multi-million deal renewal with Vodafone India.

“We believe this growth in the current FY is a one-off and does not take away the broader underlying issue of IBM India being highly dependent on the traditional deal mix plagued with shrinking margins. Greyhound Research believes replicating a similar success story in FY 17-18 will be a lofty (not impossible) task for the newly announced management at IBM India,” the report said.

Senior-level exodus

Recent senior-level executive exits also point to problems brewing within the company, specifically in its cloud business.

Vivek Malhotra, who headed the cloud business at IBM India, left the company abruptly in early December. Karthik Padmanabhan, who was leading the efforts to build the IBM Cloud Ecosystem across the Asia-Pacific region, also quit the company last month.

Similarly, Jaideep John, who headed the IBM mobility platform, Kaustubh Chandra who headed marketing for the cloud portfolio and Nilkanth Iyer, who led the cloud ecosystem team in IBM India-South Asia have also quit the company recently.

IBM India’s woes with its current domestic IT services business mix can only be expected to multiply in FY 17-18, the Greyhound report said, highlighting the company’s high dependence on traditional services such as data centre infrastructure, servers, network management, application management services and other maintenance support services.

Watson deployment

IBM’s cognitive push with Watson has also not translated into customer adoption, with only Manipal Hospital so far taking it to a deployment stage. IBM says that Watson deployments often take more than a year but the fact remains that in the last three years while IBM has been able to acquire multiple customers for Watson in other geographies, in India it is still struggling.

The report also talks about how IBM has been unwilling to engage in outcome-based deals, which are increasingly becoming the norm, along with smaller deals with cloud components instead of large strategic outsourcing deals.

“With Strategic Outsourcing deals (both new and a refresh of existing ones) fast becoming few and far between, margin pressures touching an all-time high and business outcomes increasingly becoming a de facto standard, ensuring growth, avoiding a flattish revenue, increasing deal margin and changing the broader deal mix can well be expected to be the focus of the new leadership,” said Sanchit Gogia, CEO at Greyhound Research, who co-authored the report along with Anshoo Nandwaani, principal analyst at the firm.

In a conversation with BusinessLine, Ashish Kumar, Vice-President — Cloud, IBM Asia Pacific, said the exits had nothing to do with performance issues. “We have not had any problems in terms of performance. We won the renewal deal from Vodafone for five years, which was pretty large. We’ve also worked with a lot of small companies such as digital animation firm Prana.”

Bluemix platform

Kumar said that IBM’s Bluemix platform has seen a lot of acceptance from its Systems Integrator partners such as HCL and Tech Mahindra. “HCL is developing an IoT practice on Bluemix, while Tech Mahindra has 10,000 people trained on Bluemix. This highlights the success of the Bluemix platform,” Kumar said.

IBM also refuted claims that it hasn’t been able to perform in the cloud space in India. “In India, the success of IBM’s unique approach to cloud is demonstrated in our engagement with clients like DHFL, YES Bank, Mahindra, Aegon Life, Prana (to name a few) and several start-ups which we are working with to support their transition to cloud,” IBM said.

Karan Bajwa, IBM’s new India Managing Director, who has taken over from Microsoft, was credited with building Microsoft’s rapidly growing cloud business in India. Bajwa is already seen getting aggressive within IBM. According to sources, decisions on some of the exits in the cloud division, which wasn’t performing well, were taken by Bajwa who is trying to change the way the organisation works. Therefore, significant changes lie ahead.

Published on January 11, 2017
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