In one of the biggest news of the year, IBM recently announced that it is splitting its IT services business into a new company, temporarily named NewCo. The move headed by its CEO, Arvind Krishna, will lead to diversification of the world’s first big computing firm away from its legacy businesses to focus on high-margin cloud computing and AI business. The company believes that with this move, both the companies will be on an improved growth trajectory with more remarkable ability to partner and capture new opportunities.

With this, IBM becomes the big first computing firm to split up from its legacy business to focus on the new tech. The brand new IBM will accelerate and focus on the $1 trillion hybrid-cloud opportunity, whereas the NewCo. will focus on its services business with a revenue of around $19 billion. The NewCo will provide technical support to 4,600 clients in 115 countries, and is expected to record an expense of nearly $5 billion to be incurred in the separation and operational changes.

Krishna believes that this move will help the company revive growth after almost a decade of shrinking revenue, with a strategic focus on each of the businesses. “Now is the right time to create two market-leading companies focused on what they do best”, the company stated.

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