Results season? Thank god for services

PwC's partners may not all be on the Christmas card lists of their IBM Global Services equivalents - rumours abound that the latter are a little miffed that the former get paid a lot more than they do - but Big Blue's biggest cheeses will be pretty chuffed at their decision to buy up the consulting and services organisation.

In its latest financial results, the bigger, all-improved IBM Global Services pulled in $10.2bn in revenue, a substantial 24 per cent up on the first quarter of 2002.

Indeed, the importance of services to the modern global high-tech business seems to be getting greater and greater. HP - which never used to be renowned for its outsourcing strength - has signed, or come close to signing, three mega deals in the last few days: one worth $600m with Bank of Ireland, another worth an undisclosed sum with Ericsson and a whopping $3bn, 10-year contract with Procter & Gamble. Not bad for a week's work.

Some companies - Cap Gemini Ernst & Young among them - are also rubbing their hands together at the choppy waters EDS is currently trying to navigate. The once impregnable outsourcer has struggled of late, and some of its larger contracts are soon up for renewal (and therefore potential cancellation), the Inland Revenue among them.

But even if EDS loses this one, there should still be plenty of money to go round. Gartner has predicted that the IT outsourcing marketing in North America alone will rise from $101bn in 2000 to about $160bn in 2005.

However, Gartner has also warned that half of IT outsourcing projects will be considered unsuccessful in 2003 because they will not deliver the expected value. Indeed, the much coveted Inland Revenue business hasn't exactly been an untrammelled success.

So why are these IT stalwarts so keen to target services and gain potentially awkward accounts? Well, for fear of greatly over-simplifying things, Microsoft is the only big software house capable of making juicy profits, and Dell is the only big hardware company able to keep its shareholders happy. Without services, IBM et al would be in big trouble.

But what if IBM starts 'doing an EDS'? What if HP's new outsourcing customers end up a tad dissatisfied with the service they're getting a few years down the line and start looking around, Inland Revenue-like, for an alternative (which includes bringing the work back in-house)?

To make sure this doesn't happen all the services companies are going to have to work as hard at keeping their existing clients as they did attaining them in the first place. That puts the user in an enviable position.

Remember: you are the goose, and it's entirely within your rights to keep the golden egg to yourself. Dell's CIO has - and we all know what kind of shape his IT systems are in...