Working with Other Vendors
That deal was with an alliance of other vendors. It was a consortium that included Fujitsu and included a few other people in the UKalso, Dell and Cisco are major suppliers. We are the team leader and the team is working well.To a certain extent. Over time, most large corporations will have two, maybe three services vendors. The key is not making it so complicated that there are too many interfaces to manage. Part of the GM project was to break things into logical bundles. Not too many companies are doing it. Managing is very hard. GM is among the most sophisticated companies in the world and they have a very significant staff to manage this. A rumor emerged recently about Hewlett-Packard acquiring Computer Sciences Corp. What is your take on that combination as a potential competitor? I havent seen any substantiation to the rumor. We havent seen HP in any major competitions. I think theyre still trying to digest some of the very aggressive sales they made a couple of years ago. Click here to read more from Michael Jordan about the EDS turnaround. CSC has also not been as visible on the radar screen as they were a year and a half ago. Consolidation in this industry is kind of inevitable, and thats fine with us. Is a merger possible for EDS? I dont see anything that would really help us. Its not possible to talk about outsourcing without talking about globalization these days. Do you think youre well-positioned for the so-called "flat" world? Our business is clearly less-impacted by the growth of the Indian players. We have about 14,000 people in what we call cost-advantaged locations and that will probably grow significantly over time. Were not just in India, were in Eastern Europe and Latin America. Its a trend, you have to react to it. For [U.S.] government work, weve been setting up lower cost centers, like one in El Paso. Some of the Indian players are growing at very rapid rates. They are competitors in certain major pieces of application work although they dont have the front end of say, Accenture. They might buy the front end. Yeah, they could. But in the infrastructure business, we dont see them. Theyre not there. Its getting to be kind of a game between us and IBMdata center, virtual server, remote managementall of that. It sounds like you see HP as a challenged competitor in some ways. I think theyre challenged in that they signed a bunch of very difficult contracts from the economic standpoint. My recollection is they offered significant savings, which was required to win the contract, but didnt have the infrastructure to achieve the savings. After an initial foray into the business, they havent been as aggressive. I think under the previous leadership, they were all things to all peopleconsumer electronics, printers, digital photography, PCs, high-end servers, softwareit was like they wanted to cover everything on the waterfront. The pull-back from broad-based investment is a smart thing. AT Kearneywhy was there not the synergy that one might have expected? Kearneys a very different kind of consulting firm from, say, an Accenture. Kearney is more like a McKinsey. It didnt fit. There was too big a gap between high-value consulting and outsourcing or even applications. Its a boutique. Its a boutique and it just didnt fit our corporate cultureyou couldnt reward properly the people who were building the business. You couldnt pay them enough? Yes, in our structure. And they wanted to build ownership. I was with McKinsey for ten years and I do know the prima donna mentality. Youre saying that Kearney had a few prima donnas then? Sure, they all do. The good ones are prima donnas. Were you a prima donna? Yeah, sort of [laughter]. In very few situations were we in the same clients together. Looking at IBM and its acquisition of PriceWaterhouseCoopers Consulting, which is now IBM Business Consulting Services, you can say they have a little of that, cant you? Theyre more on the Accenture model. They bought a big resource and got a lot of people. Theyre also finding out its a burden to keep 20,000 people billing. So I think theyre still trying to figure out how to run a consulting business. They [IBM] are basically a hardware and marketing shop. Theyre still having adjustment problems. So you think that some of those people will be leaving IBM? The rumors are a lot of their senior people will probably [leave] when their lockup period is over. Would you be interested in bringing some of them on? Yes. Next Page: A return to the Ross Perot era.
Some analysts are quite hot on the concept of multisourcinglike what GM is trying to do. They would say the UK Ministry of Defence contract is multisourced because there are multiple providers. Do you think multisourcing is a real trend?