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HP takes aim at outsourcing rivals

Despite being late to the game, company sees itself as well-placed to take on top-tier rivals and challenge smaller up-and-coming players.

    Despite being late to the outsourcing game, Hewlett-Packard sees itself as well-placed to take on its top-tier rivals and challenge smaller up-and-coming players.

    Steve Smith, appointed in January to lead the HP Managed Services unit, told CNETAsia that his team is raring to go.

    "We're definitely a tier-one competitor in the space," said the industry veteran, who had worked at outsourcing pioneer Electronic Data Systems for 16 years. "We're always invited to participate in the big accounts."

    Barely three years into the game, HP today ranks among the "Big Six" companies that include Accenture, ACS, Computer Sciences, EDS and IBM, according to the latest quarterly market index by outsourcing adviser TPI.

    Last week, HP signed a multimillion-dollar outsourcing contract with the Bank of Baroda in India. HP will implement and manage the bank's service-oriented architecture, which includes core banking, phone banking, Internet banking, delivery channel integration, customer relationship management and data warehousing.

    "It's a milestone customer win which follows the Bank of India deal," Smith said. "It's easily one of our largest wins."

    HP's focus for 2005 will be on four areas: communications, financial services, public and manufacturing. "If you look at what's in the industry's pipeline, these are the four key sectors," he noted.

    In addition, 2005 presents new opportunities for HP on the outsourcing front as contracts signed 10 years ago with competitors will be up for renewal, he said.

    "We're into second-generation outsourcing. In the next six to seven months, companies that decided to outsource eight to 10 years ago, will be looking at the next step, and many have determined that they know how to govern not just one supplier," Smith explained.

    "They'll be looking to see what else is there besides EDS," he added.

    Although there will still be big single-vendor deals, Smith said the market is starting to favor the best-of-breed approach.

    "Certainly in the last 10 to 15 years, big companies were being selected to do big implementations as sole-source deals. Now, there's a big swing in trend. Some big companies are swinging it back to picking an expert for a certain bundle, a certain area," he noted.

    An example is the recent Renault deal in which the automotive giant awarded three five-year IT contracts totaling $817 million to Atos Origin, Computer Sciences and HP.

    "We were picked for the desktop support, someone else did applications and a third (vendor) for the infrastructure," Smith said. "There will still be single source but for some, and if you look at some of the recent announcements like Renault, their intention is to look for multiple suppliers."

    Isabelle Chan reported for CNETAsia.