Feeds

EDS: IT outsourcing focus

2700 jobs will be lost

  • alert
  • submit to reddit

Build a business case: developing custom apps

Electronic Data Systems [EDS] has announced that it is to change its strategy and recast itself as a unified IT outsourcing business. This comes at a time when companies are looking for quantifiable ways to cut IT costs. EDS needs to ensure close interaction with the client to improve services and guarantee customer satisfaction.

2,700 employees at EDS face losing their jobs as the company focuses on its core IT outsourcing business in an attempt to strengthen its balance sheet. The job losses will total around 2% of the company's global work force and the change in strategy will push EDS further into business process outsourcing.

EDS hope that the move will help to reshape the company into a unified IT outsourcing business and bring together its multiple lines of business. The restructure and asset write-downs are expected to cost EDS around $425-475 million in 2003, but it expects to save $230 million annually as a result of the job cuts.

EDS's decision to concentrate on its core outsourcing business seems to come at the right time. The weak economy has led to a strong focus on ROI and so the company's attention is turning towards solutions that can be implemented quickly and where the impact on profitability can be easily quantified. Many companies, burdened by numerous labor-intensive tasks and large, expensive IT needs, will increase their use of primarily offshore outsourcing, to help manage costs.

In the UK, the Inland Revenue failed to meet deadlines for tax credit payments and blamed EDS for the problems. It attributed the delays to "serious problems with the computer system" that was developed by EDS. It is expected that the Inland Revenue will confront EDS over non-performance of contract once the payments of tax credits is back on schedule.

To ensure its outsourcing business does not encounter any more problems, such as those with the Inland Revenue, EDS should encourage its clients to take a hands-on approach. The company needs to learn from the experience of a client's existing IT staff to help it become very familiar with the client's business processes and IT systems.

Boost IT visibility and business value

More from The Register

next story
Microsoft: Azure isn't ready for biz-critical apps … yet
Microsoft will move its own IT to the cloud to avoid $200m server bill
Shoot-em-up: Sony Online Entertainment hit by 'large scale DDoS attack'
Games disrupted as firm struggles to control network
Silicon Valley jolted by magnitude 6.1 quake – its biggest in 25 years
Did the earth move for you at VMworld – oh, OK. It just did. A lot
VMware's high-wire balancing act: EVO might drag us ALL down
Get it right, EMC, or there'll be STORAGE CIVIL WAR. Mark my words
Forrester says it's time to give up on physical storage arrays
The physical/virtual storage tipping point may just have arrived
VMware vaporises vCHS hybrid cloud service
AnD yEt mOre cRazy cAps to dEal wIth
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Endpoint data privacy in the cloud is easier than you think
Innovations in encryption and storage resolve issues of data privacy and key requirements for companies to look for in a solution.
Scale data protection with your virtual environment
To scale at the rate of virtualization growth, data protection solutions need to adopt new capabilities and simplify current features.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?