HP buying EDS- Offensive to IBM or defensive to Indian firms?

Saw the big news today about HP maybe buying EDS in a deal rumored to be in the 12 to 13 billion dollar range. That is a fat 35%+ premium over what it was trading at before rumors of the deal were announced. Most of the commentary I have seen positions this deal as HP making a move to better compete with IBM. While I agree that is certainly an angle to this deal, I think another important angle is keeping HP ahead of the pack of large Indian services firms that have been expanding world-wide over the last few years. In the global marketplace for IT services and consulting, HP and IBM may be the American based entries in a world-wide competition with Infosys, Tata, and other firms from India, China and the rest of the world.. For this reason I think it is a good move by HP to shore up a solid second place behind IBM.

I should mention that at StillSecure we partner with both companies and I have had a chance to work with both of them. EDS is certainly not the powerhouse it was 10 years ago, let alone in the Ross Perot/GM heyday. Like any company that size it is hard to make rapid change with the amount of inertia built into the system. However, they have been in turn around mode for several years and perhaps HP can make this buy with EDS on the way up. One thing for sure is Mark Hurd, HP CEO is remaking this company in his own wishes if not image. So far everything he has touched there has turned out well, so lets see what he can do with EDS's 2.8% average year to year growth. He will have to do better for this deal to be considered a success.