Outsourcing services: Signs of Success

New clients have arrived at HP’s outsourcing doors courtesy of Compaq, according to IDC.

A year after merging, HP-Compaq is getting a bigger slice of the services pie. IDC Canada Ltd. outsourcing analyst Jason Bremner said that the

merger helped the two companies become a more significant player in this space, improving their services delivery capabilities. Though exact numbers were unavailable, HP was the big beneficiary in this market, he said, as Compaq brought a number of customers to the table. Prior to the merger HP’s hold on the outsourcing market was significantly weaker. The nature of the outsourcing market, however, is such that the company’s performance should not be judged in terms of new customer numbers but rather the amount of money flowing into the HP services division.

“”You’ll generally have a small number of clients spending a lot of money. They signed a CIBC deal in November of 2002, so now you have one client committed to spending $300 million a year. So certainly they’ve been successful since the merger,”” he said.

The merger has also meant the addition of two large Toronto-based data centres, which fell into HP’s hands when it bought CIBC’s share of Intria-HP. The facilities should help the company grow their business, Bremner said, since it will now be able to add a number of new clients to its roster without having to invest in new facilities. That should mean significant savings, he said.

Customer Close-Up: Grant Westcott, head of technology infrastructure at CIBC in Toronto, said that the merger has put the financial institution into “”a sweet spot between a product relationship and a product agnostic service relationship.””

Before the merger, CIBC relied heavily on Compaq technology. However, it has historically had strong ties with the service side of HP. This, he said, makes the combined company a one-stop shop.

“”When you put the two together, from a sum of the parts we have a good product relationship and a good service relationship as well,”” he said. But, he noted, the outsourcing deal is still in transition.

“”We’re still learning how to extract maximum value out of the whole mix. That takes time, but it’s a good place to be.””

Tsaparis says: CIBC brought new staff to HP, which helped cut down on the number of layoffs in Canada (HP doesn’t break out Canadian figures for job losses). It also allowed HP to set up a managed services hub that will work with global clients, including recently signed deals with Procter & Gamble and Ericsson. “”Those large managed service technology wins are good news for our Canadian operations,”” he said.


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