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Kyndryl
Vendor Analysis
published on Jan 29, 2025
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Report Overview:
This NelsonHall key vendor assessment consists of 50 pages and provides a comprehensive and objective analysis of Kyndryl's IT and business process services offerings, capabilities, and market and financial strengths
Who is this Report for:
NelsonHall's Key Vendor Assessment on Kyndryl is a comprehensive assessment of Kyndryl's offerings and capabilities, designed for:
- Marketing, sales, and business managers developing strategies to target service opportunities within the BPS/IT services markets
- Sourcing managers monitoring the capabilities of existing suppliers of IT services and identifying vendor suitability for IT services
- Consultants advising clients on vendor selection
- Vendor marketing, sales, and business managers looking to benchmark themselves against their peers
- Financial analysts and investors specializing in the BPO/IT services sector.
Scope of this Report:
The report provides a comprehensive and objective analysis of Kyndryl’s offerings, capabilities, and market and financial strengths, including:
- Identification of the company’s strategy, emphasis, and new developments
- Analysis of the company’s strengths, weaknesses, and outlook
- Revenue estimates
- Analysis of the profile of the company’s customer base, including the company’s targeting strategy and examples of current contracts
- Analysis of the company’s offerings and key service components
- Analysis of the company’s delivery organization.
Key Findings & Highlights:
The former IBM GTS, now Kyndryl, was span off at the worst possible time, on November 3, 2021. The company faced fast declining IT infrastructure service revenues, impacted by the pandemic-led accelerated adoption of cloud computing. Kyndryl’s 120 data centers emptied as clients migrated IT infrastructures and applications to public cloud. Unfortunately, emptying data centers was not Kyndryl’s only challenge. The company inherited from IBM managed service contracts that were little-profitable. Kyndryl embarked on a multi-year transformation journey and is now seeing the light at the end of the tunnel: the company believes it should return to CC revenue growth in Q4 FY25 (calendar Q1 2025).
Kyndryl is headquartered in NYC. Its FY25 revenues, ending March 31, 2025, will be $15.2-15.4bn. The company has ~80k employees and ~4k clients, of which 75% are Fortune 100 and 50% are Fortune 500 organizations. Its top 10 clients account for 10% of its total revenues (down from 15% at the IPO).
The company is the largest IT infrastructure service vendor globally, significantly larger than other tier-one competitors such as DXC, Atos Tech Foundations, Fujitsu, and T-Systems. It estimates that it manages 60% of the world’s mainframes.
Kyndryl specializes in run services, i.e., IT infrastructure management/managed services (MS) contracts. These contracts are multi-year engagements, lasting three to five years, as part of relations older than ten years. Managed Services accounted for 81% of revenues in Q2 FY25. Facing declining MS revenues, the company launched its consulting and IT infrastructure professional services arm, Kyndryl Consult. Kyndryl Consult complements MS by providing transformation services, which are somewhat more profitable than MS, over a shorter duration (up to two years). The unit grows fast, balancing MS’ decline. It positions Kyndryl in cloud migration, data & AI, and security; it also helps to increase client Kyndryl’s wallet share. Kyndryl Consult estimates it will have revenues of ~$2.8bn in FY25.