It looks like two giants of the international sourcing industry may be about to join forces. HP has revealed that it is in the advanced stage of talks focused on the acquisition of EDS. As EDS is the second largest IT services player in the world and HP is the fifth, this would create a new $40bn a year leviathan – a real challenge to the beast that is IBM.

The business press is excited about the deal, but beyond confirming that they are in talks there is no confirmed deal. In fact, the way the story seems to be playing out in the press makes it looks as if the story leaked before either company wanted it to be public.

Although in revenue terms this would create a giant IT services firm, there is one area where it would not excel – management consulting. As everyone knows, EDS sold off its management consulting arm AT Kearney two years ago and HP has no real expertise in that area either.

In her blog for CIO magazine, Stephanie Overby hints that Accenture might be next. And why not? The combined might of HP and EDS could probably consume Accenture and if the merger works then the new entity would be a genuine rival to IBM, both in size and range of services.

It looks like the predicated wave of mergers and acquisitions in IT services is not only going to be at the second tier of smaller companies.

I facilitated a meeting the other day for the board of the UK India Business Council (UKIBC). This is the (fairly) new body created from the earlier Indo-British Partnership Network, the major difference being that the IBPN was essentially a networking group, yet the UKIBC is a well-funded body focused on the business relationship between India and the UK.

UK Trade and Investment, the government organisation that promotes British business overseas, has released £1m of funding into UKIBC. This is intended to create a raft of new research and services to British business, allowing an easier relationship with India.

Though the UKIBC covers all sectors, it has some areas of focus and the hi-tech and sourcing sectors are of great interest. Some of the services UKIBC can help with include helping British companies wanting to explore the offshore option in India. Although UKIBC has received funding from government, it operates as a private sector firm and the intention is to focus only on operating in the private sector – so it’s a good place to go for real business advice.

I had not interacted with the council before, but as I looked around the room I recognised a number of faces from my own work on linking business between India and the UK. It’s a great team they have assembled and I hope they do a good job.

Does anyone really read any of the white papers churned out by IT suppliers? I don’t want to sound flippant because I know that there are some great publications produced by some organisations, but generally the quality is dire.

Let’s face it, the role of most commercially-oriented (as opposed to academic) white papers is either to function as a marketing device – bits of paper to hand out at conferences – or as an ego boost to the consultants who write them.

I just received two white papers by email from one of the major international IT suppliers - take a look at a quote from one of them:

“Many IT organisations have a metrics handbook that suggests the set of metrics to be followed. If such a handbook prescribes a set of mandatory metrics, I would like such metrics to be rather small in number. A larger set of metrics can remain optional, leaving it to the discretion of the project. Now the question is - how can one decide what would be the right metric. It is the question of finding the right metric first before getting the metric right; the irony that comes out of Joseph Juran’s adage do right things before doing things right.”

Excuse me? Now, a paper on improving software quality is never going to be a gripping read, but it should be possible to read it without thinking you just wandered into one of the drug-taking sequences in a Hunter S. Thompson novel.

So what’s the answer? In my view it’s staring the IT companies in the face, the humble blog. If those consultants really are as smart as they claim then they should be able to produce short, regular comment that is far more interesting and useful than the dirge they presently produce. These are supposed to be IT companies, so how come they seem wedded to the idea of supporting the printing press forever more?

I was out last night in Soho at a bar next door to the Computing office for the launch party of a new outsourcing magazine – Sourcing Focus.

Chris Middleton, an ex-Computing staffer, is editing the new magazine and it will feature outsourcing content from the National Outsourcing Association – along with news and blogs.

In theory it’s competition I guess. People looking at the blogs on Sourcing Focus might not be here on Computing checking out our blogs, but I don’t feel worried. The very nature of online content means people subscribe to a large number of news feeds and use what is useful now and then, rather than exclusively using one source of information as the Gospel version of the outsourcing truth.

There is still a real shortage of good quality information and writing on outsourcing. It’s a huge topic affecting millions of people, yet much of the writing on the topic remains ill-informed or just plain dull. I’m involved in the industry and yet my eyes glaze over reading a lot of the information sent to me by marketing departments and eager PRs.

The Indian technology providers are offering services for free, cutting back on new hires, not replacing consultants as they leave firms – and let’s face it with all the uncertainty and cutbacks going on – a lot of people are just choosing to walk.

And yet, what’s going on at IBM? It just increased its dividend by 25 per cent. For the past four quarters shareholders in Big Blue have enjoyed a 40 cents per share dividend, yet in the latest payout IBM paid 50 cents per share.

Just two weeks ago IBM reported a 26 per cent increase in annual profits and earning forecasts were increased. In fact, IBM is even buying back $12bn of its own shares this year.

Has anyone told IBM there is supposed to be a global credit crunch that is causing some other IT service providers to weep into their masala tea?

I received an interesting email from a friend of mine, Gavin Cooney, who runs a company in Dublin called Learnosity. It is focused on using the telephone for tests and exams, such as taking an oral language test with the telephone instead of with the teacher in a school.

Gavin is trying to set up a call centre in India. It’s designed to connect job candidates to people who can test their English language skills on the phone. Now, in most countries this would be a pretty easy thing to set up. There are plenty of virtual call centre services such as Voxbone that could be set up extremely quickly.

However he has a problem trying to get any service together because there are questions over the legality of some kinds of IP services using voice over IP (VoIP) in India. Take a look at this blog entry for an opinion - http://andyabramson.blogs.com/voipwatch/2004/08/india_cracks_do.html.

Isn’t it strange that India presents such an advanced face in the contact centre industry, yet unrestricted VoIP is not an option?

One of the big debates around offshore is whether the US economic slowdown will encourage more investigation of offshoring by companies as a means to control costs, or will it just mean that all purchasing decisions are frozen? In a recent report, Offshoring IT Services Can Cut Costs: Options for a Potential Economic Downturn, analyst Gartner claimed that the slowdown will be an absolute boon for offshoring.

The Gartner prediction states that the US economic slowdown will lead buyers of IT services to consider increasing the percentage of their labour in offshore, lower-cost locations. India will remain the dominant location for IT offshore services for North American and European buyers as a result of its scale, quality of resources and strong presence of local and traditional service providers.

Gartner goes further to state that this will be the case whether we only see a mild slowdown or a more prolonged and deep recession. The analyst believes that in the best-case scenario – a mild slowdown – existing plans to use the offshore model will be accelerated and some companies who might not have previously considered offshoring will now think of it as a more feasible option.

In the worst-case scenario – a deep recession – we can expect to see a considerable amount of cost cutting through aggressive offshoring programmes.

On the surface it all sounds good for the offshore suppliers, but in my recent conversations with several of these companies I know they are starting to feel the pain because the uncertainty in the economy is making it harder for their clients to make a decision. Even companies that are considering offshoring programmes are taking a lot longer than usual to make decisions right now. Let’s face it, if your firm has reined in business travel and put a freeze on new recruits then a major business decision such as outsourcing a process to the other side of the world is going to take longer to plan than usual.

Roll up, roll up. Get your free outsourcing here! You know how we spent years trying to shift the perception of offshore outsourcing from the slash ‘n’ burn strategy, the race to the bottom, the exploitation of developing economies where everyone will work for pennies?

Remember how it gradually moved into the realm of being a strategic tool used by the management to access better, more flexible resource, with skills that were not previously found in the retained organisation?

It seems we are now reaching the ultimate in low cost offshoring though – free offshoring. Well, not really totally free, but Tata Consultancy Services (TCS) is using the loss leader concept to try stimulating some buying decisions. It’s a bit like the supermarkets that will sell butter and eggs at a loss safe in the knowledge that once you are inside their four walls, you are probably going to buy something else.

TCS has started offering to shoulder the cost of transition work, the process of preparing a function to be moved from it’s current location and into the new offshore location. Usually the client would pay for this, as it is their project, but this TCS ‘special offer’ looks like it is designed to spur on a few decisions that may be currently stalled due to the black clouds swirling over the economy.

Perhaps it is working for them, but it seems like a bit of a cheap shot that devalues the expertise of the supplier. Will they ever be able to charge for transition again now some clients get it for free?

I was in the gents' toilet earlier today at the Washington Hotel in London’s swish Mayfair district. “Who would have thought it? I cannot have imagined this 10 years ago,” said the London-based correspondent of PTI – the Press Trust of India. We were sharing a toilet conversation about the past hour in which we had witnessed some of the great and good in British politics talk about the importance of the UK / India relationship.

The lunch was arranged for the Labour Friends of India by Saffron Chase, a PR and lobbying firm run by a friend of mine, Vikas Pota. Vikas is one of those movers and shakers in political society who knows everyone worth knowing. As I entered the room, Vikas wandered over and grabbed my arm; he guided me over to have a chat with the guy running one of the biggest hedge funds in London.

The MP for Ealing North, Steve Pound, who chairs the Labour Friends of India, gave a talk about the British relationship with India. He introduced the Prime Minister, who had been delayed trying to get through the crowded bar area of the hotel, much to the amusement of the guests – at least one peer was heard to mutter that this was not the first time the PM was delayed in the bar, though I’m sure it was in mirth and not in the literal sense of a Liberal Democrat leader.

The Mayor for London, Ken Livingstone, followed with a speech that included the sentiments that he could never disagree with anything the Prime Minister said. I bet Tony Blair wished for that kind of compliance back in the day.

Lord Kinnock, Chairman of the British Council and former leader of the Labour Party, was being presented with the Fenner Brockway medal for promoting better relations between the UK and India. He then made a rambling, but interesting speech. The hosts were getting worried as Kinnock was going on a bit. It was interesting to most of us, but clearly some people like the PM and Mayor had to get moving. Steve Pound attempted to sneak up alongside Kinnock to tell him to hurry up. Kinnock immediately said that he knew he was running over and that he would finish soon. He then added that he was always careful when people approached from the side in case he would get stabbed in the back. He recalled a 1985 speech at the Labour Party Conference where Eric Heffer had tried approaching while Kinnock was speaking.

It may have been somewhat hagiographic because of the Indian audience, but the off the record view of many politicians is that India is a great friend and worth developing. A lot of those in power fear talking on the record about their concerns for China, and so the emphatic support for India can be taken as a vicarious way of saying that they will support a large democratic state over a large dictatorship any day – but the economics of the matter prevents them saying it openly…

A new survey out today commissioned by PriceWaterhouseCoopers and the Department for Business Enterprise and Regulatory Reform (BERR), indicates that 13 per cent of Britain’s large businesses have faced malicious network penetration by cybercriminals.

This is an interesting observation, not least because the survey took the views of over 1,000 companies, but also because the figure was a marked leap from the 2 per cent reported only two years ago, and could even underestimate the problem, given that many firms do not admit to successful attacks on their IT systems.

Malicious attacks are estimated to cost the UK economy several billion pounds a year. The same survey also revealed that despite falling victim to 94 serious data breaches in the past year, 90 per cent of businesses still let staff take sensitive information off site on USB sticks and in laptops – a disaster waiting to happen with various examples of pub laptop thefts proving the point.

Outsourcing can provide two sides to the coin. Sometimes it can be a benefit to get some standards written up, procedures in place, and relationships with a specialist IT company that understands the value of digital information. On the other hand, sometimes it means that company-to-company hand-offs of information need to take place where previously everything was internal, and that itself can cause issues.