From The Wall Street Journal, more signs of the changing times in technology services and the continuing evolution from labor-intensive “same mess for less” to offshoring labor arbitrage to now leveraging standardization and automation through hybrid cloud:
On Tuesday, H-P disclosed plans to dismiss as many as 33,300 workers over the next three years, most from the technology services group it had built from Electronic Data Systems Corp., a $13.9 billion acquisition.
The 2008 acquisition floundered in the years after the deal was struck as H-P failed to squeeze profits from EDS’s manpower-intensive and big-computer operations, and as rising competition from lower-cost Indian outsourcers put pressure on the business.
Today, companies that don’t want to spend millions running cables and connecting servers have cloud computing. These services let companies use lower-cost servers and storage in data centers run by Amazon.com Inc., MicrosoftCorp., and Google Inc. for less money and difficulty than H-P’s traditional IT services.
“When people host IT in Amazon or in [Microsoft] Azure, in a sense they’re actually outsourcing their data center,” said Neil MacDonald,a vice president with research firm Gartner.
Two years ago, Amazon and Microsoft’s cloud operations were “too small to matter,” said Brent Bracelin, an analyst with Pacific Crest Securities. This year, these cloud providers could do $15 billion in business, and that number could climb to $40 billion within two years, he said.
“We are moving from the experimental era of cloud computing into the professional era,” he said.