International Business Machines Corp. (IBM) recently signed a multiyear IT services contract with Nomura Services India Private Ltd. to provide disaster and system failure response services. Financial terms on the agreement were not disclosed.
Nomura will implement IBM’s end-to-end business continuity and resiliency services to bolster its business continuity, disaster and system failure response strategies. The deal will also provide Nomura with an in-city work area recovery service to recover business functions if operations are interrupted.
The contract, which was executed in July, further demonstrates IBM’s leadership in the managed resiliency space in India. Going forward, the company expects emerging markets to drive revenue growth.
Moreover, IBM’s Global Business Services won a 5-year contract with BP Plc. (BP) to manage the oil and gas giant’s enterprise applications and integrated service desk responsibilities (SAP applications). The company had the largest share in the contract among multiple Indian IT services firms Infosys Technologies (INFY), Tata Consultancy Services and Wipro Ltd. (WIT).
IBM’s growing strategic alliances in emerging markets position the company for higher growth. With revival in technology spending, continuous innovative solutions, increased customer wins and a strong portfolio of products, IBM is well positioned to drive growth.
While its growing footprint in international markets remains a positive for the company, we are cautious about currency fluctuations, which are taking a toll on revenue. We believe it may even be critical to earnings growth going forward. This headwind notwithstanding, we believe IBM’s new wins positions it for long term growth and maintain our Outperform rating on the stock.
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