IBM’s former IT services unit is planning to split off its China business in the latest sign of how geopolitical tensions and Chinese data laws are forcing multinationals to rethink their global footprint.
US-based Kyndryl, which was spun out of IBM in 2021 and says it is the world’s largest provider of IT infrastructure services by revenue, has told some employees about the decision to split, according to three people with knowledge of the matter.
It has not set out details of when it will take effect or who will control the China entity, the people said. One added that the move would affect roughly 6,000 staff in Hong Kong and mainland China.
Kyndryl is listed in New York and has partnerships with Microsoft, Google Cloud and Amazon Web Services. The company, which owns data centre space and advises companies on storing and managing their data, accounted for more than a quarter of IBM’s revenues before it was spun off.
Kyndryl has been caught up in the fallout from US-China tensions in both countries. Chinese customers have cut back on the use of foreign companies to help manage their IT infrastructure, while some US customers have asked for its China-based employees to not work on their US projects or to be closely scrutinised, particularly in AI-related businesses, the people added.
The company has “been finding it very hard to [operate] as a US corporate in the data and technology space in China”, one of the people said. “It makes you wonder which other big tech companies are going to have to follow the same route.”
The company, which made $17bn in revenues in the year to March, has