Another of our readers has submitted this contrary comment on the HCL partnership. We thought it worth showing in its own post as well as a comment on the original.
It is no surprise that CSC is withdrawing from outsourcing. Lawrie was left with little choice given CSC’s accumulation of mistakes and errors of strategic direction going back 15 years. These were always going to come back and bite CSC and they did. The surprise is that CSC succeeded in managing down major problems in outsourcing for so long. The good news is that they have now found an exit strategy before outsourcing losses and failure to win new business brings the company to its knees as NHS did a couple of years ago.
The strategic errors included initially keeping so many small data centers that came with outsourcing wins, leading to lack of scale and islands of inefficiency; the profit models which created high profits in the early years of a contract but little or no profit in later years; the permanent need to sign up more and more (doubtful quality?) new business to mask the profit shortfalls in the later years of older contracts; the unachievable “cost challenges” factored into the profit models which kept pushing problems into the future; the failure or refusal by CSC top executives to understand the changes in the outsourcing market; a stubbornly persistent focus on trying to win mega deals when it was clear that the era of the big infrastructure and apps deals was over; and then the recurring cancellation of investments to compensate for the shortfalls in “this quarter’s profit” .
The tragedy is that CSC could have been one of the pioneers and leaders in Cloud, as it had been in the 1990s in infrastructure and apps outsourcing. Things could have been different if a decade ago it had analyzed objectively the changes in market and client needs, the advances in technology, and the company’s capabilities and market position. This could have led them to what we now know as “Cloud”. But this would have required strategic vision at a time when CSC was led by a CEO whose focus and priorities were detail, numbers, cost cutting and “this quarter’s profit”. So it did not happen.
Mike Lawrie deserves criticism for many things, but on this one he deserves credit for defusing a potential time bomb.