uploads///IBM GBS Revenue Growth

IBM’s Consulting Unit Drives Growth in Its Services Business

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Aug. 18 2019, Updated 4:16 p.m. ET

IBM’s consulting unit grows by a healthy 7%

IBM’s (IBM) Global Business Services segment comprises its Consulting, Global Process Services, and Application Management sub-segments. As the chart below shows, the Consulting unit grew 6.8% YoY (year-over-year) in the last quarter, mitigating declines in the Application Management unit.

IBM is looking to leverage the growth the world is experiencing in the IT service market, and Microsoft (MSFT) is optimistic about IT. However, Gartner expects the IT service market to slow to 4.7% YoY growth next year from 5.9% this year, mainly due to macro issues such as trade tension and currency volatility.

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IBM aims to compete with more client wins

Despite the healthy IT environment, IBM faces a lot of competition in the IT service market. According to Everest Group, Accenture (ACN), TCS, and Cognizant (CTSH) are the world’s top three IT service providers, and Wipro (WIT) and IBM are in fourth and fifth place, respectively. Everest reported that while Accenture has maintained the top position, TCS surprised everyone by placing second.

IBM has been trying to grow its IT service business by catering to more clients. During the last quarter’s earnings conference call, IBM discussed how it is helping to bring about a digital change at Sally Beauty (SBH), and creating a virtual assistant for Lloyds Banking Group (LYG) to communicate with clients more efficiently.

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