Profits? Really!

Am I mistaken, or was there some positive news for the tech consulting industry this week? Not only did IBM post a 12 percent increase in fourth-quarter profit compared to 2007, it had the temerity to predict a good year ahead for itself. What's the reason for this outbreak of bullishness? A couple of things, actually. First, according to The Wall Street Journal (see previous link), software and services revenue at the firm appears to be driving its overall growth. In the Journal's own words, "IBM said it was able to increase earnings in the face of a revenue slowdown because it is getting a larger share of its business from high-profit software and services." Not much translation needed there.

The second positive sign for consulting in Big Blue's report is that it posted a 20 percent increase in outsourcing contracts over the quarter - and it expects more to come despite the downturn. That means more companies are turning to outsourcing and offshoring for tech solutions - great news for the industry, if not necessarily the parts of it housed within the U.S.

Also in the "good for IBM" category, it emerged this week that the firm is likely to be one of the biggest beneficiaries of the strife at beleaguered Satyam - something that has "tarnished the credibility of India's outsourcing industry" as a whole, according to Bloomberg. That's placed U.S.-based (and audited) firms front and center for picking up some of the contracts Satyam might otherwise have taken home - great news not only for IBM, but also for Accenture, which Bloomberg also tips to take some new business.

And speaking of Accenture, Naomi highlighted its first quarter 2009 results in this post a couple weeks ago, but they're worth revisiting as well ? especially as they also showed an increase in both consulting and outsourcing services compared to the previous year (6 and 7 percent, respectively). In light of the Bloomberg prediction, the second quarter results should be interesting to watch - particularly in outsourcing.

-Posted by Phil Stott