The agreement for SAP consultancy Axon to sell out to Indian offshoring giant Infosys Technologies for about £407m comes at the same time as HP is reportedly about to complete its capture of EDS. ‘May you live in interesting times’ goes the old saying and, for the ICT services sector, these certainly are interesting times. But CIOs might note that the saying was, apparently, also a curse.
Plenty of pundits such as veteran services watcher Richard Holway and Duncan Aitchison of outsourcing consultancy TPI have long predicted that the sector was overripe for consolidation. After a protracted phoney war, that consolidation finally seems to be occurring. What’s not so clear is whether that’s such a good thing for the companies themselves, or for their customers.
As Holway notes on his blog, Axon is being squeezed for scale (it turns over a little more than £200m) and because a plague of rivals are fighting on its home turf. Those same words could be used to apply to many other companies, leading to more deal making.
But just because the single life is becoming hard to bear doesn’t necessarily mean that getting hitched will make you happy. HP and EDS will face the familiar hurdles when giants clash, while Infosys-Axon might be able to add cultural differences to the list of reasons to squabble.
Certainly, other potential buyers and sellers will be watching the progress of these combinations with interest. And a spoonful of schadenfreude, naturally.