IBM after realizing the need to focus in order to grow and succeed has decided to split its managed infrastructure services division which makes up to 2148 of IT sales and workforce into a new entity known as NewCo.
About one-fourth of IBM staff and 9000 employees will be part of NewCo. At least 3rd of IBM employees in India will be part of this new entity which is expected to get its permanent name next year and be listed in the share market.
With the mere announcement of IBM diversification, there was an increase of 6% in its share value. However, the total cost of forming a new entity will be $5 billion but it will allow the company to follow a more profitable business model.
According to reports, the acquisition of Red hat the cloud computing company in 2019 for $34 billion had paved the way for the split.
Once a new entity NewCo makes its debut in the share market next year it is expected to have annual revenue of $19 billion and will be catering to a good 75 percent of the Fortune 100 organizations.