On Thursday, IBM announced an agreement reached with India’s HCL Technologies Ltd. to sell them select IBM software assets for $1.8 billion, in line with Big Blue’s strategy to focus more on cloud computing.
Representing a total addressable market of more than $50 billion, the software assets in scope include products like Appscan for secure application development, BigFix for secure device management, Unica (on-premise) for marketing automation, Commerce (on-premise) for omni-channel eCommerce, Portal (on-premise) for digital experience, Notes & Domino for email and low-code rapid application development, and Connections for work stream collaboration.
Although the deal is expected to close by mid-2019, an existing licensing partnership between the two companies will continue for five of the products.
IBM has been striving to emerge as a leader in the hybrid cloud market for some time now, but its declining software sales weighed heavy on its latest quarterly revenue – which might have instigated IBM to go for this deal.
HCL, whose revenue from software services business rose about 21% in the second-quarter, plans to further strengthen its position in the software services market after this acquisition.
Payable entirely in cash including earn-out, HCL plans to fund this deal mostly through internal accruals but may also include debt worth $300 million. The deal also marks the largest ever acquisition by any Indian IT company and is expected to give HCL access to a clientele of more than 5,000 customers.