IBM is combining software and services to attract smaller, more-profitable technology outsourcing and consulting work even as two recent contracts signal that the era of large deals is not yet over, a senior executive said this week.

The big contracts with Vodafone and French shipper CMA CGM Group could give IBM its best quarter of technology services deals in nearly two years, analysts said.

But Ginni Rometty, senior vice-president of IBM global business services, one of two divisions in the group's largest unit, cautioned that one quarter does not yet make a trend.

"The very large deals are very intermittent and not always predictable," she said.

"You have both dynamics coming at the same time. In general, there is a trend of clients doing things in more bite-sized pieces."

IBM may report that fourth-quarter contracts for technology outsourcing and consulting deals rose at least 13 per cent from a year earlier to an estimated $13 billion (€10.18 billion), according to Sanford C Bernstein analyst Toni Sacconaghi, who has an "outperform" rating on the stock.

Rometty, who reports to chief executive Samuel Palmisano, said recent large contracts do not yet signal a return of the megadeals of the past, but they do supplement the growth of smaller, shorter signings that are typically more profitable.

IBM is offering about 40 so-called business solutions that combine software and services for specific client problems, Rometty said.

These include claims-processing for insurers as well as ways to track products from manufacturers to buyers.

Expected growth in fourth-quarter services signings would counter a series of disappointing quarters for IBM in which services deals dipped as low as $9.6 billion in the second quarter, down 34 per cent from a year earlier and the lowest since the third quarter of 2002.

IBM services signings are a closely watched barometer of future revenue growth.

Revenue in services rose just 2.7 per cent in the third quarter, compared with 8.9 per cent growth in computer hardware and 8.5 per cent growth in software. - (Reuters)