https://www.computing.co.uk/ctg/news/3068859/ibm-to-be-gone-from-aecom-by-spring-says-insider
A depressingly familiar story that could be from any one of IBM's outsourced clients. No doubt the loss of this account increases the chance of more "proposals to meet business objectives" as the tired old euphemism goes!
1yqo. I expect IBM will keep the managing of mainframes. Why. Because it’s a monopoly, and they can exploit all of the advantages IBM has (expertise, SW, HW advantages, etc etc) to gain a profit. I expect IBM to exit all of the outsourcing because there will always be someone who will do it cheaper (IBM proved that with IBM India). Vietnam now underpriced China!!!. The second point is bandwidth is cheap, and partnering with IBM for your Intel, Help desk, Unix Infrastructure just doesn’t bring any synergies anymore. Better to “low bid” it out, Move to where it’s cheap, and provide “minimum” script support.
Will they exit all outsourcing or continue to manage the mainframe shops?
Q1b You have hit the nail on the head. No one cares about service levels. It’s an intangible cost. IBM, Accenture, DCX, Bain, etc etc comes in and makes the case to the CFO that they will (as you said) take over the mess for less. Do they??? ABSOLUTELY. But remember even before the ink is dry on the contract, the outsourcer is cutting costs as everyone bid at a loss to win the contract. As such “service levels” be damned. The only contracts getting scrutiny lately are state contracts with very strict hiring level commitments. IBM got banged on them, because they didn’t think the states would hold them to the employment terms. Did their service level improve??? NOPE. But no one could quantify that. What they could quantify was head counts and IBM got burned. How did IBM respond??? Pay the penalty, price it into similar contracts as a cost of doing business, and move on. Now that the bean counters have discovered that the more heads /lower profit models don’t close in India anymore, it’s time to change course. IBM will exit the higher head count/lower margin business. They have to. Can someone buy that business and clean it up. ABSOUTELY My money’s moneys on Bain due to their having been hired to due the due diligence of “services” restructuring
It’s shockingly bad and shows utter contempt for the paying customer. What started (IT Outsourcing) as a “same mess for less” offering is now nothing but a farce to TUPE out staff, decimate IT organisations and a bean counting exercise that all but destroys In house IT capabilities. You get what you pay for and guess what, if IBM promises to save you nn% year on year then that will come at a similar % drop in service levels.
Does this surprise anyone???? Outsourced contracts are very low margin with associated high labor costs. (Remember this assumes you know what you are doing). IBM will exit this business ASAP. IBM India exit stage right. Will Bain backfill this??? Only time will tell