The whole rest of the universe needs software too. Most companies are grossly incompetent to develop it themselves. Most are things that SWEs of the type which visit HN would never, ever want to work on. IBM does that adequately well. That's "services."
If I need a tool built which will manage workflow at a management consulting firm, a custom tool for managing cases at a law firm, or some custom supply chain kludge -- the 99% of other "boring" software -- and I happen to know nothing about technology, who do I turn to?
IBM isn't a bad choice. It's a major step up from Indian firms in terms of both price and quality. It has significant in-house technology to leverage. It's a safe choice. It will usually do better than in-house IT.
I recently evaluated the business of a company which builds ships. They developed software in-house with an IT staff who weren't qualified to tie their own shoelaces. They had huge military contracts. They didn't subcontract to IBM, but it wouldn't have been a bad choice.