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How IBM’s Global Business Services Unit Is Doing

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Analyzing business trends

IBM’s (IBM) Global Business Services unit, which represents ~21% of its total business, comprises its consulting, global business services, and application management offerings. In the last five quarters, the segment has grown 0.6% compounded annually, driven by improvement in its consulting business.

The graph above shows IBM’s Global Business Services revenue over the last five quarters. During that time, IBM’s consulting business has grown at a compound annual rate of 1.4%. In fiscal Q2 2018, its Global Business Services revenue grew 2.4% YoY (year-over-year) to $4.2 billion, buoyed by a strong revenue backlog. During the quarter, the tech giant struck 13 new deals worth over $100 million.

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Key drivers

IBM’s strategy to facilitate the deployment of hybrid-cloud platforms, boost digitalization, and offer a secured environment continues to drive the company’s consulting business. In the second quarter, the consulting sub-segment grew 5.6% YoY to $1.9 billion, representing ~45% of Global Business Services revenue. Therefore, an improvement in IBM’s consulting revenue could boost the Global Business Services segment. In the second quarter, IBM and Mediaocean introduced a blockchain association, which include popular advertisers and publishers such as Kellogg (K), Unilever (UL), and Pfizer (PFE).

The global business services sub-unit also bounced back to growth in the second quarter, rising 33.3% to $0.4 billion. In the last five quarters, it has grown 7.5% compounded annually.

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