Kyndryl bets on partnerships, consulting arm to redeem itself

Slaga said that the company was prioritizing existing accounts by activating its open integration platform — Bridge and adding consulting partners based on the industry sector. 

The existing accounts or clients, according to Steve Dickens, vice president of hybrid cloud at The Futurum Group, would be the company’s first primary target to expand its business.

“Kyndryl will be looking to engage the C-Suite of its ~4k customers to drive digital transformation consulting engagements.  The traditional outsourcing business gives it access to the highest levels of IT as a service delivery partner so they will look to build from these relationships into more project-focused engagement,” Dickens said.

A closer look at the company’s financials, at least for the last two quarters, reveals that Kyndryl Consult is the only green shoot for the company at the moment.

Despite the company reporting a 9% year-on-year decline in total revenue for the fourth quarter, the consulting arm of the business reported a 12% year-on-year growth and accounted for about 15% of the company’s total revenue.

For the previous sequential quarter, the consulting arm reported 19% year-on-year growth while accounting for 14% of the company’s total revenue.

For both quarters, Kyndryl cited its decision to reduce inherited zero-margin and low-margin third-party content in customer contracts as the reason behind its fall in revenue.

Delivery effectiveness and a more nuanced approach to its customer accounts, according to Reuner, are the main reasons for Kyndryl’s significant progress since its separation from IBM.

Kyndryl’s revenue dwarfs rivals

Despite Kyndryl’s revenue taking a hit since it spun off from IBM, the company is still much larger than its rivals.

“Kyndryl’s mainframe business is 6x bigger than their nearest rival DXC and this provides a center of gravity for mission-critical workloads,” said Dicken from The Futurum Group.

Kyndryl Consult competes with the likes of IBM Consulting, Deloitte Consulting, and consulting arms of Accenture, Capgemini, Tata Consultancy Services, Wipro, and Cognizant.

However, according to Slaga, the next phase of growth for Kyndryl Consult will continue to come from regular projects, such as modernizing IT, modernizing applications, moving to a new data center, and moving to a cloud-native architecture, as the practice leader believes that enterprises are still far away from implementing generative AI.

Presently, enterprises are continuing with cost-optimization efforts and no big budgets for generative AI deployments have come to the fore, Slaga said, adding that proof-of-concepts (PoCs) were being actioned by the company along with projects that check the data readiness of enterprises to deploy generative AI at scale.