EDS to minimise exposure to large contracts
- Article 45 of 77
- Information Age, July 2002
In early July 2002, IT services giant EDS announced it was to withdraw from a record-breaking, $1 billion a year outsourcing deal with Proctor & Gamble that would have seen it take control of more than four-fifths of the consumer giant's information technology department.
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However, EDS has come under fire for being late with its MoD and Inland Revenue contracts, and massively exceeding the budgets set for these projects. David Fisher, strategy director for EDS UK, counters that the UK government has been adding requests for more features to the contracts, and that EDS is not inflating the costs. In fact, costs have dropped dramatically, he claims.
EDS' acquisition of web hosting company Loudcloud in June may boost its public sector sales, given that Loudcloud hosts the UKonline.gov.uk government information web site. More important, it may attract new European customers that are finding it increasingly difficult to find a reliable, financially stable web hosting provider that isn't compromised by the fortunes of a parent company from the troubled telecommunications sector. The CIO of a major UK media company says of the challenge of selecting a web-hosting provider: “IBM is the only choice left in Europe.” As a result, EDS may be able to break into this area.
One thing is clear, however: EDS must find growth opportunities. While overall revenues in 2001 were up 12% to $21.5 billion, 2002 has been harder, and in early July, it announced plans to lay off 2,000 people in response to sluggish demand.
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