The promise of artificial intelligence is substantial, yet realizing it hinges on a fundamental prerequisite: a robust, functional infrastructure. This was a key insight from Martin Schroeter, Chairman and CEO of Kyndryl, who recently spoke with Frank Holland on CNBC's Worldwide Exchange. Schroeter detailed how Kyndryl, an IT infrastructure services provider spun off from IBM in 2021, is strategically positioning itself at the forefront of the AI revolution by focusing on the foundational work essential for its clients' success.
Schroeter underscored the burgeoning demand for consulting services in the AI space, a seemingly counterintuitive trend given AI's automation potential. He clarified that Kyndryl's role is to prepare clients' existing infrastructure for the future, which is undeniably AI-driven. "What you need to get AI off the ground is an infrastructure that's going to work," he stated, emphasizing the critical "inform, analyze, and design" work that precedes any successful AI implementation. This upfront engagement, where Kyndryl helps customers ready their systems, is currently experiencing "universal interest and universal experimentation" due to AI's transformative potential.
The CEO also elaborated on Kyndryl’s "3 A's" strategy: Advanced Delivery, Alliances, and Focus Accounts, which has been instrumental in the company's financial turnaround. Kyndryl inherited a substantial $20 billion backlog upon its spin-off, much of which was unprofitable. By "reimagining the relationships" with these focus accounts, the company has converted these liabilities into significant profit drivers. This shift reflects a deliberate move towards higher-value, more strategic engagements that optimize existing infrastructure and integrate advanced technologies.
A significant portion of Kyndryl’s growth stems from its hyperscaler-related businesses, which Schroeter projects will expand by 50% this year. This growth outpaces the capital expenditure forecasts of major hyperscalers like Amazon (42% growth), Microsoft (36% growth), and Alphabet (62% growth) for fiscal year 2025. Kyndryl's ability to capture this market share highlights its deep integration into the cloud ecosystem and its expertise in enabling complex AI deployments.
The tangible benefits of AI are already evident in Kyndryl's client engagements. Schroeter cited an example where their AI framework, Kyndryl Bridge, reduced a 14-day process to just 14 minutes for a customer. This kind of "step change" in efficiency and capability validates the sustained high interest in AI, countering any market skepticism about a potential "bubble." Kyndryl's Q1 results further affirm this trajectory, with consulting growing 30% and hyperscaler business seeing high double-digit growth. The company's strategy is clearly demonstrating that the path to AI innovation is paved with robust infrastructure and expert guidance.
