IBM Spinoff Kyndryl Forms Global Alliance with Microsoft
Kyndryl, which completed its divestiture from IBM last week, says Microsoft is its only “premier” partner.
November 12, 2021
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Marking its first strategic alliance since becoming a standalone company, IBM spinoff Kyndryl has formed a global partnership with Microsoft. The pact, announced by the two companies on Friday, makes Microsoft for now the only Kyndryl Premier Global Alliance partner.
Kyndryl, which reported revenues of $19.1 billion last year, calls itself the largest provider of managed infrastructure and implementation services. Its revenues are more than double those of its largest competitor, DXC, according to Kyndryl’s investor presentation. But Kyndryl’s revenues are trending to decline 2.6% this year, and analysts don’t expect to see growth for the company until 2025.
The partnership with Microsoft comes just we week after IBM finalized the divestiture of its managed services business, now Kyndryl. On Nov. 4, Kyndryl began trading under the “KD” ticker on the New York Stock Exchange. Kyndryl shares have declined over 16% since last week’s spinoff, through increased slightly on Thursday.
Partnerships
One benefit of Kyndryl as a provider of managed services decoupled from IBM, is it can structure partnerships more freely. An alliance of Kyndryl and Microsoft is hardly a surprise. IBM and its managed services business have been partners for over 30 years. Kyndryl was already a Microsoft Gold Partner. Now the two companies are committing to a “long-term” partnership to expand into new markets.
The companies said they will jointly build modern solutions on Microsoft’s cloud and on expanding hybrid cloud migration. Kyndryl and Microsoft anticipate that the alliance will create billions of dollars in incremental revenues for both companies.
Cloud migration, data, security and intelligent automation are among the opportunities the two companies are targeting, according to Kyndryl chairman and CEO Martin Schroeter. Specifically, Kyndryl and Microsoft will focus on data modernization and governance, AI-based implementation within specific industry verticals, resiliency and migration of critical workloads to the cloud.
Kyndryl’s Martin Schroeter