IBM says it is unfazed by HP-EDS deal

"Hewlett-Packard has bought 'yesterday's business model'... It is unlikely to challenge our presence in the IT services space," IBM India VP & General Manager (Global Delivery) Rajesh Nambiar said.     

HP, largely a product company, last month bought EDS, a pioneer in outsourcing managed computer services, for 13.90 billion dollar.     

Nambiar said the revenue from services business of HP-EDS combined entity is estimated at $36 billion, whereas IBM's revenues from services is calculated at $52 billion, indicating IBM's leadership in the services space.     
Analysts feel the deal could pole vault HP to the second place in the global technology services industry after IBM, giving rise to steep competition.     

"EDS have a huge labour force but they are concentrated in high-cost jurisdictions, and they really lack the global delivery capabilities that are expected of services, margins... Or services businesses these days.      

So, HP is going to have to devote an extensive amount of time and resources to improve this business model that is aged and out of date," Nambiar added.