HP Services to cut costs by automation and offshore delivery

Hewlett-Packard's Enterprise Services business is counting on automation of its services and an expansion of its strategy to move work to low-cost offshore locations like India, to help cut costs and get more efficient, an executive of the company said on Wednesday.

The roll out of automation is also likely to be more efficient at the company's large offshore centers, said Robb Rasmussen, vice president and general manager for Best Shore Delivery of HP Enterprise Services on Wednesday.

"One of the most optimum places for automation is within an offshore location," Rasmussen said. The roll out of technology to automate a service, and the training of staff can be done more efficiently in these locations, as they have thousands of staff serving a large number of clients, he added.

HP said earlier this month that it was cutting 9,000 jobs over three years as it restructures its enterprise services business and automates the services it offers enterprise customers.

Some other companies such as Dell have also said they are introducing automation to make their services more efficient.

HP said it would invest US$1 billion in this connection, while also hiring 6,000 staff for the new services initiative, including some in services delivery.

In some offshore locations, including India, HP may however see net additions to the number of staff, Rasmussen said. The company is still hiring in India and some other offshore locations, and does not plan a reduction in staff in these countries, he added.

India is already the second largest location for HP's services business in terms of number of staff.

HP also has a majority-owned services subsidiary in Bangalore, called MphasiS, which became part of the company after its 2008 acquisition of Electronic Data Systems.

As its business grows, HP's enterprise services is having an increasing number of staff in offshore locations, Rasmussen said. The company has 14 offshore services centers across Asia, Eastern Europe and Latin America.

Customers are increasingly opting for an "India plus one" offshore delivery model, which includes near-shore delivery from locations in the customer's time zone, in addition to delivery from India, he added.

Automation will further drive down costs, as key services like applications management will be done with fewer people, Rasmussen said.