HP-EDS deal unlikely to challenge our presence: IBM
Analysts feel the deal could pole vault HP to the second place in the global technology services industry after IBM, giving rise to steep competition. Speed up your PC
By PTI |
NEW DELHI: Unperturbed by Hewlett-Packard's acquisition of outsourcing company EDS, Software giant IBM on Sunday said the development is not likely to "challenge" its leadership position in IT services.
"Hewlett-Packard has bought 'yesterday's business model'... it is unlikely to challenge our presence in the IT services space," IBM India VP & General Manager (Global Delivery) Rajesh Nambiar told reporters.
HP, largely a product company, last month bought EDS, a pioneer in outsourcing managed computer services, for $13.90 billion.
Nambiar said the revenue from services business of HP-EDS combined entity is estimated at $36 billion, whereas IBM's revenues from services is calculated at $52 billion, indicating IBM's leadership in the services space.
Analysts feel the deal could pole vault HP to the second place in the global technology services industry after IBM, giving rise to steep competition.
"EDS have a huge labour force but they are concentrated in high-cost jurisdictions, and they really lack the global delivery capabilities that are expected of services, margins... or services businesses these days.
"Hewlett-Packard has bought 'yesterday's business model'... it is unlikely to challenge our presence in the IT services space," IBM India VP & General Manager (Global Delivery) Rajesh Nambiar told reporters.
HP, largely a product company, last month bought EDS, a pioneer in outsourcing managed computer services, for $13.90 billion.
Nambiar said the revenue from services business of HP-EDS combined entity is estimated at $36 billion, whereas IBM's revenues from services is calculated at $52 billion, indicating IBM's leadership in the services space.
Analysts feel the deal could pole vault HP to the second place in the global technology services industry after IBM, giving rise to steep competition.
"EDS have a huge labour force but they are concentrated in high-cost jurisdictions, and they really lack the global delivery capabilities that are expected of services, margins... or services businesses these days.
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So, HP is going to have to devote an extensive amount of time and resources to improve this business model that is aged and out of date," Nambiar added.
However, analysts said wherever there are big systems integration and ongoing management projects to be won, HP-EDS would be in a better position to compete with IBM.
"Though HP-EDS will try to cross sell their products they lack consulting skills. Clients today look for overall solutions and both the companies currently does not have any consulting capabilities, Nambair said.
"It is extremely difficult to integrate a services business into a core business like HP's. There's going to be cultural differences to overcome. There will be technical and channel differences that they'll have to overcome," he added.
IBM has made the transition from products to 'systems and services'and spun off its PC business to Lenovo.
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