Solution: even more off-shoring. And fire some old people.
Quick, shift even more employment to India. IBM's clients won't mind paying premium rates for the cheapest labor force that IBM can find.
I agree that IBM's only chance of recovery is innovation. But lack of innovation isn't how they ended up here. It was off-shoring the labor force to India to cut costs. Your real customers notice immediately, and their upper management eventually notices the problems. Eventually they extricate themselves from the IBM lock-in, and IBM won't get back in until the memory of the pain fades.