What if Intel was a services vendor?

At a conference in India earlier this year I heard Murthy, the founder of Infosys predict that improvements in IVR technology would kill call centers. Murthy is generally revered in India as one of the founding fathers of the offshore industry. But this comment so incensed a call center CEO in the audience that he asked Murthy "and when do you think automated code generators will kill your software business?" Murthy mumbled something about software being much more complex than handling calls. They should be listening to each other.

Offshore vendors have delivered a layer of much needed productivity improvement to IT budgets with their labor rate arbitrage. In the next wave they better be thinking about labor productivity through technology leverage to offset their wage inflation, staff turnover etc. Unfortunately, the DNA in services worldwide is defined more by Accenture and EDS, not the "eat your children", relentless price/performance improvement culture at Intel. While they talk about "accelerators", shared solution centers - their 1000th SAP or 100th Ariba project actually costs more than their first - because they now have more experience so believe they deserve to be paid more.

Cannot even count on IBM, which understands price/performance curves extremely well. In a speech last year Sal Palmisano, CEO talked about focus on technologies to improve labor productivity. But when half his revenues now come from services, you really think he meant his own client billable labor?