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HP Enterprise To Spin Off, Merge IT Services Division With CSC
Posted May 25, 2016
HP Enterprise To Spin Off, Merge IT Services Division With CSC
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By Jef Cozza. Updated May 25, 2016 11:14AM

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Tech giant Hewlett Packard Enterprise (HPE) is spinning off its services division, which will merge with Computer Sciences Corp. (CSC). The new entity will create one of the world’s largest pure-play IT services companies, with $26 billion in annual revenue and more than 5,000 clients around the world, the companies said. The merger is expected to be completed by March of next year.

Today’s announcement comes six months after CSC separated into two publicly traded companies: CSC, to serve commercial and government clients worldwide, and CSRA, which serves public sector clients in the United States.

CSC Bolsters Its Position

“Our proposed merger with HPE Enterprise Services is a logical next step in CSC’s transformation,” Mike Lawrie, chairman, president and CEO of CSC, said in a statement. “As a more powerful and versatile global technology services business, the new company will be well positioned to innovate, compete and serve clients in a rapidly changing marketplace.”

Since CSC’s split into separate companies six months ago, it has made a number of acquisitions to bolster its position in the global IT service market, including the acquisition of UXC in the Australia-New Zealand region, buying insurance software and business process services company Xchanging Plc in London, and acquiring Fixnetix and Fruition Partners to bolster its leadership in banking and capital markets and service management.

Hewlett Packard Enterprise characterized the deal as part of a broader strategy to turn around the fortunes of its services division. The remaining divisions left in HPE will focus more closely on end-to-end infrastructure solutions for the enterprise cloud and mobility markets.

HPE Continues Turnaround

The standalone HPE will have $33 billion in expected annual revenue, and will sharpen its focus on secure, next-generation, software-defined infrastructure, according to the company. “By bringing together leadership positions in these key data center technologies, HPE will help customers run their traditional IT better, while building a bridge to multi-cloud environments,” HPE said in a statement.

In addition to its focus on the data center, HPE said the remaining standalone company will also focus on developing its next generation of Aruba and computing products for campus, branch, and IoT applications. In addition, through HPE's Technology Services division, the company will also continue to offer consulting capabilities to its customers, while HPE Financial Services will provide clients with financing options.

The company said it will also continue to maintain a portfolio of operations, security, and big data software assets to deliver machine learning and deep analytics capabilities to customers.

HPE was formed in November from the split of the Hewlett-Packard Co. The remainder of the company, dubbed HP Inc., retained the old HP's personal computer and printing businesses. Since then, HPE has been trying to turn around its operating model and financial profile in part by exiting several of its most high-cost data centers, improving low-cost location mix and rebalancing its workforce, the company said.

Image Credit: Hewlett Packard Enterprise via HPE Facebook page.

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