India is “not behind” in the AI race and has a big advantage in the area of deployment since it already services a large number of MNCs, IBM chairman, president and CEO Arvind Krishna told Surabhi Agarwal in an interview — the first time he’s given one in India during his six-year tenure as head of the $67.5-billion technology giant. Indian-origin Krishna, currently visiting the country, met Prime Minister Narendra Modi on Monday and talked about upskilling India’s IT workforce. He said the IBM stock crash after the Anthropic post on COBOL was an overreaction and said enterprises need external consultants to carry out legacy transformation projects. Edited excerpts: You’ve completed close to six years at the helm of IBM. You have turned around the company, the stock was up about 120%. But there are challenges ahead, especially with last night’s stock crash after Anthropic’s COBOL post. How do you view the next one, three, five years?When I became CEO, I had a very clear vision that we need to grow and we need to focus IBM on the areas of incredible growth. First of all is software. About 20% of the company was software back in 2019. Today, 45% of the company is software. Three-fourths of our M&A and about the same in terms of our R&D innovation goes into software. We also felt that the consulting part of the business can grow, but managed services is unlikely to. So we separated that and spun it out. Big task. It was a third of IBM. It was about a third of our revenue. I kind of would like to say I think we’re maybe halfway through the journey, not likely at the end of the journey.ETtech
People say AI is eating software. Do you think traditional legacy IT companies are going to be disrupted at mass scale by firms like Anthropic?A lot of these people are using the same exact logic as eyeballs was used in the year 2000… Eyeballs turned out to be a metric that was irrelevant in the long term, completely irrelevant. AI is going to be an incredible productivity tool. I’m a firm believer in that. Inside our own company, we have so far created $4.5 billion of productivity gains which we have reinvested in R&D and sales. Does AI make services obsolete?Actually, I don’t think it’ll go away because services are used when companies want to transform themselves strategically… You tend to use a consultant who naturally gets fired when the task is over. A lot of the work is in business process change and in change management… That is much easier done using outside people than inside.What’s your take on the stock market reaction to the Anthropic post?We released a COBOL modernisation tool two and a half years ago and it is used by almost 200 clients. There are some companies that make a lot of news… But to me, a), there was no news there, and two, it completely misses the point of the systems. Why does the bulk of the world retail banking… run on the mainframe? It’s got nothing to do with COBOL.ETtech
It has to do with the architecture of the mainframe. For certain critical workloads, like if you’re a bank that does a trillion dollars of transactions a day… That’s a workload that the mainframe is great for. Or you want resilience… or… encryption… or… six nines of availability, that is our customer who uses the mainframe. So I think time will tell, and all these things, the next six months, 12 months, 18 months will tell us. We actually believe that one should have good AI tools to modernise your codebases. By the way, not just COBOL, but all codebases.How do AI agents change IT services in the next 6-12 months?We think that IT services, which have largely been based on people, are going to be augmented by… an AI assistant… an AI agent. We created what we call IBM Consulting Advantage… over 200 digital workers… deployed at over 200 clients. I think about 50% of the total work that is done by people today will be done by AI agents. But that does not mean that half the people will no longer have roles. If you lower the cost, then the appetite to consume goes way up, and we can see that. But if you don’t embrace AI agents to become twice as productive, you’re going to lose.What do you think of the Citrini Research report which talks about job displacement not just in IT but also related industries like food delivery, retail, real-estate and credit?There will be… some job displacement. Sixty percent of the world’s workers work in some form of pretty physical work, so there’s no displacement there. They will maybe get more efficient with the use of AI and do more, that’s it. Around 20% of workers are in creative roles like yours and so they will augment using AI. Now you’re left with that final 20% of all workers. Do I imagine that five to 10 of that 20 could get displaced by AI? Absolutely. But then there is so much more work to be done… AI is going to unlock all these aspects of delivering new business models that’ll easily consume that five to 10% of displaced workers. But those transitions are always somewhat painful. Let me acknowledge that. But I think this time around, governments are aware and want to do work, but so are companies. As an example, we at IBM, committed to train 5 million people in India with AI literacy skills. What other points that came up during your meeting with the PM? Does India have a lot to catch up on in the AI race?I don’t believe that India is trying to catch up on AI. When I was speaking with (India’s IT minister) Ashwini Vaishnaw at Davos and also this week in India, he’s been very clear. India needs to build about a dozen models, not hundreds, not thousands. And three out of those 12 are done in a year, which is not bad. I believe that India ought to focus on AI deployment because in the end, you’re part of the global economy. India has a lot of the back offices, a lot of the IT arms of the companies that they work for, then effectively you’ve got to transform those companies leveraging AI. And I think India is very good at doing that. I really believe that that is where India can excel and India can thrive because of the vast base of services.So I don’t actually think it’s behind. Now, it’s got to get people with the skills. It’s got to lean in as opposed to sort of looking backwards.ETtech
India recently announced a 20-year tax holiday for foreign cloud service providers setting up sovereign compute. Does it fit into IBM’s India strategy?When the government uses incentives… Those are great public policy vehicles for getting the behaviour of the private sector to where you want it to go. Historically, India has avoided risk, but… you’ve got to take risk if you want to succeed. We are not going to directly participate in capital infrastructure build-up. We have made a decision a while back, but we will partner. As an example, we partner with Bhati Airtel here in India… they are the provider… We will add capabilities, manage that out of the Chennai data centre, but also populate it into Mumbai and hopefully as the cloud base expands, then we’ll go to more.IBM has been opening several software labs across tier II and III towns in the country. What is the idea behind it?The talent is not reserved in Bangalore and NCR or Mumbai. Talent is where it is. Kochi was such an example. We thought we would get to 500 people. We got to 4,000. Three-fourths of those people… actually came back from all over the country. I feel, whether it’s GIFT City in Ahmedabad or it’s Lucknow, the early signals are that we’re going to have the same experience as Kochi. We are very clear, India is a great place to find talent. By the way, I think India has not realised, demographics all over the world are reducing population. Whether you take the Far East in Asia, whether you take most of Western Europe, whether you take North America, these are all declining population places in terms of local.With the help of immigration, maybe it’s flat. Without immigration, it’s actually negative. So when you take that into account and you need work to get done, who is a trusted, reliable partner that one can depend upon? I think India has a great capability and a great sort of big demographic trend to tap into for the next 20 or 30 years.As CEO of one of the largest technology companies in the world, how do you read the business environment and the continuous shocks that are coming, be it from tariffs or geopolitical conflict?I actually am convinced that 2026 should play out similar, maybe slightly better than 2025 in terms of overall GDP growth. We have our own signals from our clients… I think it aligns very well with what the IMF and the World Bank have put out. Both expect global GDP growth to be in the low threes. Congratulations to India for which it is in the low sevens. I suspect that technology spending will globally be in the five to eight percent range overall.I’ll call the environment very dynamic. Whenever there is a lot of dynamism in the business environment, there’s opportunity also. Because not all your competition is as adept at learning to deal with it. If you are, then you can maybe take an opportunity to gain market share.How do you read the impact of the tariffs and the developments of the last two days?Look, to me, you have to manage through it. We’ve got to wait and see. From my observation, the first reaction of everybody is almost always wrong. It seems to be emotional. The last two, three days, I’m not reacting to it at all. First of all, there are, in the US, at least it looks like, and I’m just reading the paper, there are several other vehicles for tariffs. So I’m not going to conclude anything based on what has been stated.Where is IBM seeing growth pockets right now?At a geography level, we’re very happy with the growth we can see in Japan, as well as in South Asia. If I look at the Middle East, it’s a huge area of growth.If you have a business, historically, how did you scale it? You hired a lot of people… and the scaling was linear with the number of people. Today, you can use technology instead… to make your sales teams more productive… improve your supply chain.Is the US turning anti-immigration, especially for Indian talent?They’re not anti-immigration. They are very much on, we want highly talented immigration. As always, when a system gets too far one way… then there becomes a sort of a whiplash. They’re talking about… people with higher and more advanced degrees, people with higher wages, people with much deeper tech skills. That means that they are leaning in for where there is a gap in skills… as opposed to no immigration.ETtech
How do you react to the proposition: AI will eat software?AI is not going to eat software. AI is going to make software a lot more productive and a lot cheaper to get built and built in a reliable way. Tell me, in the history of the world, when you find it cheaper to make a good, does more of it get consumed or less?
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