HP Strategy in India

THE combined entity of HP and EDS in India will have over Rs 15,000 crore in revenues and over 56,000 employees, taking it a notch closer to IBM’s very significant presence in the sub-continent. In terms of offshore presence, the two together will overtake the other significant player in the services space, Accenture, that plans to take its headcount to 50,000 in about a year’s time.

In India, HP is structured across three major divisions, personal systems group, technology solutions group and the imaging and printing group, while MphasiS is mainly present in the IT services and BPO. The combined entity will see very diverse set of IT business ranging from hardware, software, services, BPO and R&D, says industry observers.

But given that the key driver for the acquisition is to beef up the service portfolio and pose a credible challenge to IBM, India may play a much more central role in the future strategy of the combined entity. “Customers will now have a very clear choice between three large vendors — IBM, HP-EDS and Accenture. IBM will still be significantly ahead in terms of its offshore strategy — it has made significant investments in India. The combination of HP and EDS doesn’t immediately solve that problem,” said Gartner vice-president (research), Ben Pring.

While EDS has much stronger services portfolio globally, its offshore presence in India through MphasiS is fairly recent. MphasiS itself has started getting direction and a cohesive offshore strategy even more recently after a new management team has been appointed. HP, on the other hand, has been unable to capitalise substantially on the offshore presence it acquired through Compaq in Digital Equipment Services.

Mr Pring said that while there may be some redundancies because of overlap of functions, there may not be a substantial number because ‘HP is clearly buying EDS for its people’. However, a few former MphasiS employees expressed the view said that there would be overlapping of some roles especially in the area of IT services and BPO as HP also has strong presence in these segments.

HP also has a very strong presence in the Indian market with both its hardware and system integration capabilities leveraging the services delivery for the domestic market. It has already got certain marquee clients such as Bank of Baroda, Britannia and has stated its intention of enlarging the scale. On the other hand, MphasiS provides BPO services to domestic clients such as Bharti Airtel.