IBM Korea Takes A Hit On IT Outsourcing With Computing Errors

May 26, 2011

Last year, IBM was shunned by IT outsourcers in Korea. Among the firms that canceled contracts with IBM include Oriental Brewery Company, Esquire, and Korea Credit Guarantee Fund. These companies have moved to other outsourcing service providers like SDS, Dongbu CNI, LG CNS and Samsung SDS.

On the whole, IT outsourcing is redundant in that contracts are repeated again and again over time. Subsequently, it is natural for vendors to stick on to the same buyers. However, news reports say that companies in Korea have left IBM for a decrease in service in quality. Making things worse, the National Agricultural Cooperative Foundation (NACF) network has become faulty, reports etnews

As IBM is worried that more and more Korean clients will decline their services, particularly in the finance segment such as Kyobo Life Insurance, they are now taking another look at their security data. Their position is that they will check their systems so that it complies with business operations and still maintain their expertise in the IT industry.

In 2004, a 10-year agreement between NHN and IBM was reneged on because of computing mistakes. Moreover, the Dongkuk Mill’s decision to back out of its contract the next year left IBM with a poor record.

The discontent over IBM’s IT outsourcing market has left its management shocked and overwhelmed. The anti-IBM slogans are spreading rampantly in the IT industry since the National Agricultural Cooperative Federation incident. In fact, a number of firms who were planning to ink deals with IBM Korea are now rethinking or have canceled their plans to tie with IBM. In the meantime, rivals are winning orders from disgruntled clients complaining of mishaps with IBM. Evidently, there is a modification of power in the industry as IBM takes a hit for its problems in IT.

With billions of dollars worth of contracts at stake for IBM, foreign and domestic IT outsourcing firms are eagerly awaiting to cash in on deals.


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