So HP’s $13.9Bn acquisition of EDS became official this week – the largest-ever merger between two IT and business services providers. The merged services entity resembles a reverse-takeover of the combined services business, with all the management positions remaining in Plano, with the exception of application services.
Overall, there were few surprises in the deal-finalization announcement. However, the fact that there seems to be no initial definitive plans to integrate the businesses at a service/product level beyond the newly-outlined organization structure, gives me some cause for concern, especially considering the fact that HP/EDS has already had three months to draw up a merger-strategy. We're operating in a market where crafting and developing a global delivery strategy quickly is critical. We've seen far too many failures in recent years from services providers that have sat on their traditional revenue streams, while others have pushed aggressive services agendas to win over clients looking for vendors with new thinking and focus on driving innovation into engagements.
From a BPO perspective, there are no plans announced to go-to-market with broader IT-BPO bundled offerings across finance, HR and other vertical-specific functions. In addition, the fact that EDS’s “ExcellerateHRO” service line has been absent from the announcement is notable, especially when you consider the massive investments EDS had previously made in developing that offering. A lack of continued investment and management focus on ExcellerateHRO could well be a missed opportunity (which we discussed here) when you look at the major strides Infosys, TCS, and Wipro have made to enter this market in the last couple of years, not to mention the determination of Accenture, Capgemini and IBM to lead this bundled IT-BPO market, which many of us see as the future of IT-BPO. HP needs to work swiftly to integrate these service lines more effectively, or risk slipping behind the competition.
I'll be commenting more on the ramifications of this merger over the next few days… stay tuned. And feel free to chip in with your views – it's a huge sea-change in the competitive landscape and the next few months are critical for the newly merged entity.