Just months after Atos considered buying DXC Technology, Atos is reportedly looking to sell some of its old business, including its data center and communications business. If true, it’s another sign that the on-prem consulting business is falling out of favor.
Bloomberg reported Tuesday that Atos is exploring a sale of its legacy information technology business, including some outsourcing activities. A day later, Atos CEO Elie Girard said during his: earnings call with analysts that the company is definitely looking for some kind of change in its operations.
Girard noted that in the first half of 2021, the Resources and Services group faced severe headwinds on two legacy businesses, classic data centers and classic unified communications, where the declines were “respectively higher than what we’ve experienced in recent years.” and bigger than we expected.”
On the other hand, the acceleration of its cloud migration activities is beneficial for Atos. “First, the most complex migrations are yet to come. And as the future remains hybrid, multi-cloud, the acceleration requires more cloud orchestration,” she said.
Girard said that with so many companies moving to the cloud, usage of the company’s on-prem infrastructure is falling faster than Atos can shut down and consolidate data centers. So the company sees a strong business case for finding partners to take over those data centers and transferring the responsibility for running and consolidating those centers to the partners.
In short, Atos is somehow getting out of on-prem services.
On-Prem loses its appeal
That’s quite a sight from earlier this year when it was rumored that Atos would be interested in acquiring DXC technology. DXC, a merger of Computer Sciences Corp. and HPE’s longtime EDS consulting firm, has invested heavily in the on-prem business. The deal was called off after investors opposed it. DXC is reportedly still looking for a lover.
Atos isn’t the only company screwing up the on-prem business. Late last year, IBM announced plans to spin off its entire 90,000-employee Global Technology Services division under the name Kyndryl, with a focus on managed infrastructure services and modernization efforts.
Other players invest in other areas. Accenture, the largest IT services company, has made more than 40 acquisitions in the past year, almost all of them cloud-oriented companies. And Deloitte has acquired five cybersecurity companies this year.
All of this bodes ill for the on-prem consulting business. If the top players don’t want anything to do with it, what’s left?
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