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IBM has concluded its take-over of PwC Consulting for $3.5 billion with the new division, IBM Business Consulting Services, to comprise of 30,000 IBM staff and 30,000 transferring PwC Consulting employees.
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According to Barry Jaruzelski, who leads the technology practice at Booz Allen & Hamilton, IBM's culture and skills mix will be altered by the infusion of employees with more MBA's than Ph.D's.
PwC employees are accustomed to the more independent atmosphere at a private partnership. "IBM is the quintessential large, public corporation," Jaruzelski said.
General manager of the new division Ginni Rometty, said "The most important thing to remember is that this is an acquisition of human assets. The value is in the people. This only works if the people stay and are excited about being part of this new organization." Confirming that, Rometty, former IBM Global Services American general manager, has named three PwC executives as geographic leaders who will report directly to her.
Technology companies have not had an easy year with falling sales causing businesses to think twice about new spending. IBM has only this week announced its first $1 billion-plus consulting win since March.
Providing consulting services that help companies optimize existing computer operations can be a successful strategy, said Booz Allen's Jaruzelski. "In the current economy, where capital expenditures of all varieties are extremely weak, the rationale for a focus on service over products is pretty clear cut," he said.
The favourable purchase price was partly due to the failing economy, enabling IBM to pay about 70% of PwCs expected sales for this year. HP had considered buying PwC Consulting two years ago for $18 billion. The deal is not expected to add to IBM’s profits until the fourth quarter of 2003.
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