Dell interested in Indian-model IT firms

By Georgina Prodhan

LONDON (Reuters) - Dell (DELL.O), the world's second-biggest maker of personal computers after Hewlett-Packard (HPQ.N), wants to buy lean IT companies of the Indian school of outsourcing to improve its scale and credibility in services.

Dell makes almost 60 percent of its revenues from selling personal computers and has established a support business for corporate PC users. It now wants to expand its services business further into managing companies' computer networks.

Steve Schuckenbrock, president of Dell's large enterprise operations, said it was taking a different route from rivals HP and IBM (IBM.N) by helping firms strip out costs, rather than selling them long consultancy and software contracts.

The company, which has $10 billion (6.1 billion pounds) in cash and short-term investments, has said it wants to grow through acquisitions as well as organically, and Schuckenbrock said Dell could use some help in establishing a reputation for services.

"We think we know what we want to do but we don't have enough scale and... credibility," Schuckenbrock told Reuters in an interview. "There's no question that we are interested in acquisitions to bring scale to our services business and to bring more credibility to us as a services company."

Dell's finance chief said last week demand from businesses large and small was still very weak and the U.S. company faced a big, long-term challenge in its hardware business, where falling PC prices will put pressure on margins.

Schuckenbrock, also responsible for Dell's operations in Europe, the Middle East and Africa, reiterated that the company saw a little confidence returning to the U.S. market, although it was still too early to call, with Europe behind the United States in terms of stabilisation of IT spend.

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