This article about IBM's large contract with customer Bharti Airtel in India provides a nice microcosm of the churn happening around legacy software and outsourcing contracts. Bharti has moved away from Lotus Notes as its email platform and is rebidding many components of its IT infrastructure outsourcing deal - one that IBM has touted over the last decade as a case study of its ability to thrive in emerging economies.
A decade however is a long time. Incumbent software vendors and outsourcers - not just IBM - have innovated little and delivered even less in the way of continous improvement as labor economics offset any productivity. Besides, little of the email adminstration, laptop refreshes, backup support etc is considered "strategic" enough today to justify premium rates. And they are increasingly being benchmarked with non-traditional providers of storage, help desk providers - SaaS vendors, IaaS vendors, support services from the likes of Geek Squad.
Against those benchmarks, EVERY traditional outsourcer, not just IBM, looks bloated. In outsourcing, given it is a people intensive business, a little too much attention is paid to "relationship management". Frankly, way more attention should be going into "benchmark management".
Every outsourcing arrangement signed more than 3 years ago is going to be revisited in every customer around the world. In that sense, Bharti is just one small transaction.
