Phoenix IT has emerged from contract negotiations with EDS Global Field Services to supply desktop maintenance and support at Department of Work and Pension with an £8m plum.

That's what the Northampton-based computer services firm reckons the volume-prices gig will be worth this year. Unfortunately, the deal used to be worth £10.5m a year for Phoenix IT when BT was its lead contractor at the DWP, Kate Hanaghan of the analyst firm Ovum Holway notes.

However, price cuts for some activities are built-in to future years. And the DWP is expected to kick off a technology refresh in 2007, which will also mean even lower revenues next year. Hanaghan estimates the value of the contract will drop over the years to around £5m annually.

Phoenix has, she says, been "working hard over the past six months to improve service delivery methodologies in order to bring costs down ahead of this anticipated takeover by EDS. This should provide a cushion as it takes on this less profitable arrangement." ®

Related stories

• Phoenix makes tentative offer for ICM (16 March 2007)
• Phoenix tears Stafford from BT (8 January 2007)
• Phoenix IT results show contract pain (27 November 2006)
• Phoenix coughs £30.25m for Servo (6 November 2006)
• Phoenix jacks up profits (18 May 2006)
• Phoenix profits better than expected (31 March 2006)
• Cuts help EDS (9 February 2006)
• EDS keeps bulk of GM outsourcing deal (3 February 2006)
• Civil service mulls move to India (23 January 2006)
• Housing Corp dumps Elonex (17 January 2006)
• DWP's computerised call centres 'in meltdown' (25 November 2005)
• Phoenix enjoys first half (23 November 2005)
• EDS re-inks deal worth £2.6bn with DWP (25 August 2005)
• EDS to UK gov - give us our £13m (31 March 2005)
• Updated DWP kills 60k+ PCs in Windows XP upgrade lash-up (26 November 2004)
• Public sector has IT companies ‘over a barrel’ (9 February 2004)