IBM India revenue growth rate skids after bumper year

The Indian arm of global technology giant IBM that offers technology, business, and cloud services to its parent company and other sister concerns saw revenue growth decelerate a year after experiencing smart jump.
 
IBM India, which accounts for one-third of the global workforce, clocked net sales of ₹30,459 crore, as per data collated by VCCedge, a data research platform and a sister unit of VCCircle. Revenue growth rate for the year ended March 2024 more than halved from 22% in FY23 when it clocked a topline of ₹27,854.6 crore.
 
Meanwhile, the bottomline too faced pressure with net profit declining 6%.
 

 
IBM’s India unit has three key units including the mainstay — global delivery wing, which provides technology services, global business services and cloud services to other IBM entities, located overseas. This unit that generates over two-thirds of total India revenues, grew around 10% last year.
 
The services unit that provides clients with consulting, application management services and global process services grew the fastest at nearly 19%.
 
The systems and solutions vertical that comprises of hardware (servers and storage) and software; solutions units covering analytics, social and security, several of the new initiatives around Watson, Watson IoT, and transaction processing software; technology support services (maintenance services) to maintain and improve the availability of clients’ IT infrastructures and global asset recovery service, was on a slow burner with under 7% growth in FY24, Techcircle has gathered.
 
IBM India did not respond to TechCircle’s queries.
 
The previous year (FY23) provided much-needed relief to IBM India, which had previously suffered declining revenues and skidding profits. This growth came despite IBM losing an important business unit when it spun off its managed infrastructure services arm into a separate company Kyndryl.
 
Globally, for the year, IBM generated $61.9 billion in revenue, up 3% at constant currency in the financial year ended December 2023. “We experienced growing demand for our new watsonx platform, marked by thousands of client interactions. This demand contributed to roughly doubling the book of business for watsonx and generative AI from the third to the fourth quarter,” said Arvind Krishna, Chairman and Chief Executive Officer in a statement in the presentation in January 2024. IBM follows a January to December financial cycle.
 
Under Krishna, IBM has driven focus on software and consulting along with artificial intelligence (AI). IBM expects 2024 revenue to grow in the mid-single-digits backed by these businesses.
 
IBM’s Asia Pacific revenue for 2023 increased 1.6% though this growth stood at 7% after adjusting for currency movements. India, particularly, increased by 15% as reported and 20 percent adjusted for currency for the period January-December 2023. 
 
The company is also dealing with disagreements over taxes with the Indian Tax Authorities. “To keep its right to appeal the tax decisions, the company has already paid $557 million in advance, which is listed as prepaid taxes,” IBM had stated in its 2023 global annual report.
 
In September, IBM opened a new generative AI center at its Kochi office. This innovation is expected to generate 5,000 jobs. The news came at the time when a report by The Register stated that the company is ‘quietly’ laying off thousands of employees especially in senior-level programmers, sales and support staff.
 
Further, this year, IBM partnered with NTT Data to launch SimpliZCloud, a fully managed cloud service designed to meet the infrastructure needs of financial services organisations. Built on IBM’s LinuxONE platform, the service aims to support critical applications such as core banking, lending, and risk management. As per the company, the service is positioned to support financial institutions and other organisations with mission-critical workloads, providing modern, flexible infrastructure on a private cloud platform that meets regulatory requirements.