HP’s 2008 acquisition of EDS reduced an already small number of large infrastructure outsourcing (IO) service providers with a significant footprint in Canada. While for a time that meant buyers in Canada who were uncomfortable entering into agreements with IO providers with lesser presence in Canada had a smaller pool to choose from, the landscape is quickly changing.
First, the HP-EDS acquisition was quickly followed in 2009 by that of ACS by Xerox and Perot by Dell. Both Xerox and Dell have capabilities and resources on the ground in Canada they can utilize to increase ACS’ and Perot’s presence in the country’s IO space. Additionally, Canada appears to have caught the attention of offshore providers over the last few years, with many of the Tier 1 Indian providers making headway and developing Canadian practices with strong delivery capabilities. Also increasing competition in the IO space are providers that are leveraging emerging technologies to replace traditional IO deals.
What does this mean to the service provider community? The big Tier 1 multinational firms with strong footholds in Canada need to beware. Competition is coming from expected places, such as from major players that in the past have not focused their attention on Canada, as well as less expected up-and-comers that are gaining ground in using cloud offerings, for example in development and testing environments. The Indian players, continuing their push into the Canadian marketplace, must become better focused in order to effectively compete with the large multinationals that already have a strong track record, strong relationships, and a greater presence.
What does this mean to the buyers of IO services? Many more options. Take, for example, midrange services. They can use a large Tier 1 ITO provider and go the soup to nuts solution route. They can split the physical aspects of the data centre and servers from the services and leverage an offshore provider for remote infrastructure management outsourcing. They can use a cloud solution offered by anyone from a large Tier 1 provider to a niche vendor. As the market has matured and IO services buyers have gained experience, the risk around leveraging a new set of providers and emerging technologies has decreased, which equates to additional option advantages for Canadian buyers.
This increasingly competitive environment challenges service providers to clearly articulate the value that their solution, their proposal, and their company bring to their clients. But buyers aren’t off the hook. They must ensure that their sourcing process allows for the consideration of providers with very different capabilities and value propositions than those to which they have become accustomed.