Archive for September, 2009

Dell and Perot… and Google

September 24, 2009

I’ve been banging on about the provision of services (BPO and ITO) over the cloud. As we see increased consolidation amongst the hardware manufacturers and their generally smaller services brethren, the news yesterday that Perot Systems is being acquired for a 68% premium by Dell raises questions; and eyebrows.

Perot is still strong in the US, but its European business has suffered death from a thousand cuts. I was speaking to one of the ex most senior executives in PSE and he seems convinced that Michael Dell’s motivation is to disrupt IBM Global Services and HP Enterprise Services (neé EDS) in their expansion plans.

I know it’s a fools game to make predictions in today’s market, but I’m convinced that we will be hearing the words Perot, data centre, cloud, Dell, Google Apps and Chrome OS in the not too distant future!

Futurologist out…

We’re all doomed! – a response

September 13, 2009

Following my missive about the TPI results, Les Potton, one of my contacts and owner of Target HR, wrote:

The irony is that the potential savings from outsourcing could be a key route through the recession, but its the reluctance to commit funds up front or sign long term deals, that is likely to be contributing to the reduced number of contracts.

With purse strings tight, there will be the inevitable reluctance to spend anything, particularly if there is a perceived risk. Even if the potential solution could save a lot of cash, the process and implementation costs of getting there are often huge with the bigger outsource providers.

In my area of HR outsourcing the temptation for the big players is to go only for high value, long contracts, which may scare off some excellent prospects, who might want to start small but expand their outsourcing, as their business grows and once they feel confident it works. It is a big leap of faith for those used to having control at their fingertips.

Overall as a product, outsourcing is still a great opportunity for organisations to get quality service, best practice, specialist experience across multiple sectors and save money. However, I believe the sellers need to use a more creative sales approach and invest time understanding the prospect and helping them gain confidence in the concept (perhaps using pilot schemes etc), rather than putting a long term contract on the table early in discussions.

Whilst I agree with Les’ analysis generally, I think that the HR market is even more prone to delays in spending.

With the HRO World Europe event coming up in November, I’ll be very interested to see the mood of the HRO providers and advisors. Anecdotal evidence suggests that the market is flat/declining… watch this space.