The following appears on zdnet.com
The way firms are using outsourcing is undergoing a fundamental shift, with far-reaching consequences for Hewlett-Packard’s Enterprise Services arm.
HP EVP and Enterprise Services general manager Mike Nefkens said his division is adapting to a decline in the size of outsourcing contracts.
“The way the business used to work, it used to be the very big horizontal outsourcing [deals] where you take over people. Those really aren’t happening that much anymore,” Nefkens told ZDNet at the HP Discover conference in Barcelona last month.
“What we’re seeing now is much smaller deal sizes and the customers are wanting much more labour expertise versus just labour arbitrage,” he said.
“So we have to shift along with that and we’re making lots of changes in our portfolio.”
Last week, Hewlett-Packard spelt out the impact of the fall in the value of outsourcing contracts. It blamed a net revenue fall at Enterprise Services on “contractual price declines in ongoing contracts due in part to weak public-sector spending and enterprise IT demand” in a regulatory filing to the US Securities and Exchange Commission (SEC).
The net revenue from Enterprise Services, which provides infrastructure, app and business-process consulting, outsourcing and support, decreased 8.2 percent in the 2013 fiscal year, HP told the SEC.
