Can You Blame HP For Adjusting Its Business For The 21st Century?

Several stories ran today on HP’s decision to slash the salaries of former EDS employees. I never wish job losses on anyone, but you have to look the situation from a different angle. EDS’ model was built on an outsourcing model, big outsourcing. Companies don’t fork over $50M for service level agreements that that can span five to ten years. If you’re not delivering value quarter-over-quarter, guess what? You’re out.

Doesn’t anyone think HP realizes part of EDS’ model is broken? The problem is the world has changed. Yes, companies are still outsourcing and the deals can be mammoth but that’s more the exception than the norm.

Nobody’s pointing out that one of the things the outsourcers left at the office a while back was innovation. You see, maintenance and support became a commodity a long time ago. Your customers are now helping their customers serve themselves on the web and taking the rest of that money and investing it back in the business.

And not to pile on, but your clients aren’t paying for multi-million dollar ERP implementations anymore, so guess what? No maintenance, no support, and no IT outsourcing. The world has changed. You can’t sit in your cubicle and wait for it to come to you.