"The only way they could be turned around is by being allowed to innovate again."
I think that's part of it. EDS may be or may have been a semi-reliable ATM for the rest of HP, but I doubt it. Any time I've ever had any dealings with the EDSes of the world, I've been amazed at just how many highly-paid project managers and account executives have been involved. So they may offshore the actual work to the cheapest, lowest quality place they can find, but they need to keep all those account executives, PMs, technical liaisons, escalation managers, senior escalation managers, VPs of service delivery, etc. paid well and flying around the world.
It's the consulting model -- Accenture, EDS, CSC, IBM, and all of them do it. Every engagement has three tiers:
- Insanely compensated senior management who sell the dream to the executives
- An army of new graduate, no-experience PowerPoint-wielding 24 year old analysts, consultants, PMs and what have you flying 48 weeks out of the year, billable to the client, to be the public face of the project
- Offshore minions in cheap country of the week doing any work that is necessary
The problem is that those top two tiers are expensive and I think companies aren't as willing as they were to pay for it anymore.