Hewlett-Packard’s proposed buyout of Electronic Data Systems is prompting many companies to question whether now’s the time to dump HP or EDS as their technology-outsourcing vendor, says Sutherland partner Scott M. Hobby.

Whether many companies actually pull the trigger is another question, Hobby said.

HP on May 13 said it had agreed to acquire EDS for $13.9 billion, making the company the second-largest provider of computer services to corporations and governments. After the merger announcement, Pillsbury Winthrop Shaw Pittman partner Robert E. Zahler published a client alert that said that HP and EDS customers should review the change-of-control provisions in their contracts with HP and EDS to assess whether now is the time to dramatically restructure the contracts or terminate them.

Hobby, an outsourcing partner at Sutherland (formerly Sutherland Asbill & Brennan), said that while it's true companies should review the contracts, it’s extremely expensive for a company to switch technology providers.

“It’s really a big undertaking to leave your service provider, so a lot of this is more apparent than real,” Hobby said. “You’d have to be really unhappy with HP or EDS to pull this trigger.”

That won’t prevent some HP and EDS customers from, at the very least, trying to wring new concessions from their vendors. HP and EDS executives are in the midst of road shows to pitch to clients why the newly merged company will be able to provide better service than before, Hobby said. In these meetings, companies will take the opportunity to raise complaints.

“There is going to be a lot of saber-rattling when HP or EDS come calling,” Hobby said.

At the same time, HP and EDS’s top rivals – including IBM, Computer Sciences Corp. and Affiliated Computer Services – are also asking for face time with clients of HP and EDS to sell them on why now is a good time to terminate their contracts.

Some companies may try to win concessions from HP and EDS by sending out requests-for-proposals to IBM, CSC and others, informing HP and EDS what the new bidders are offering, then ask HP and EDS to match those promises, Hobby said.

The most likely type of company to make changes are those with small contracts with HP and EDS, typically in the $1 million to $5 million range, for “non-core” services like accounts-payable, benefits administration, customer claims or call-center work, Hobby said. Outsourcing service providers with a big presence in India, such as Sitel and Tata Consultancy Services, are most likely to win this new business, he said.

Even if companies decide not to restructure or terminate their HP and EDS contracts, the fact they’re thinking about it and asking their lawyers for advice will result in an up-tick in billable hours for outsourcing attorneys, Hobby said.

Hobby only advises companies, not service providers, on technology-outsourcing contracts. Other Atlanta law firms do conduct work for service providers like IBM, HP and EDS. Alston & Bird does work for Affiliated Computer Services, Hobby said, while King & Spalding has advised Accenture.