IBM sheds $1.8bn worth of software assets to Indian services firm

Big Blue has sold off swathes of its software assets to Indian giant HCL

India's third-largest software services firm, HCL Technologies, has announced it will acquire $1.8bn (€1.6bn) of IBM's software products.

The acquisition, which is expected to close by mid-2019, is being touted by Reuters as the largest-ever purchase by an Indian IT services firm.

IBM said the software products it is divesting represent a total addressable market of more than $50bn.

The sale covers seven software platforms, which the Indian firm said will boost its portfolio in the commerce, security and marketing verticals.

They include: Appscan (secure application development); BigFix (secure device management); Unica (on-premise marketing automation); Commerce (on-premise omni-channel); eCommerce; Portal (on-premise digital experience); Notes & Domino (email and low-code rapid application development) and Connections (workstream collaboration).

Explaining the rationale behind the sale, IBM senior VP of cognitive solutions and research John Kelly said:

"We believe the time is right to divest these select collaboration, marketing and commerce software assets, which are increasingly delivered as standalone products."

He added that the deal reflects IBM's strategy to prioritise its investment in "the emerging, high-value segments of the IT industry".

"Over the last four years, we have been prioritising our investments to develop integrated capabilities in areas such as AI for business, hybrid cloud, cybersecurity, analytics, supply chain and blockchain as well as industry-specific platforms and solutions including healthcare, industrial IOT, and financial services," he said.

It follows criticism of Big Blue in previous years for being slower than its rivals to innovate in key market trends, such as cloud computing.

However, in a move that CEO Ginni Rometty claims has reset the cloud landscape, IBM itself acquired open source vendor Red Hat last month for $34bn in the world's largest-ever software acquisition.

At the time, Rometty revealed that she wouldn't be tentative in making divestments in order to streamline the business.