EDS cuts 2% of global workforce

Link: EDS faces tax credit penalties

The redundancies, representing about 2,700 staff around the world, are likely to affect the company’s 20,000 employees in the UK, but a spokeswoman for the company said it was too early to give details of numbers.

‘It’s at too early a stage to say what the implications for the UK will be. We expect more information to be available in the third quarter of this year,’ she said.

In a statement EDS said its strategy would help to rejuvenate the company and position itself as the industry’s most cost effective high value IT outsourcing services provider under new chairman and chief executive Mike Jordan.

‘We’re targeting today’s business oriented chief information officer who typically has deep operational experience including profit and loss responsibility,’ Jordan said in a statement.

‘We’re taking steps to position EDS as the services provider of choice for business leaders looking to extract the highest returns on IT investment.’

Plans to move more work offshore, address contract performance issues, and dispose of non-core assets are expected to cost the company up to $475m in 2003.

As part of the new strategy EDS will move from multiple lines of business to a single marketing and sales activity, targeting customers with a single point of contact.

It will also forge technology alliance to offer services jointly with leading ‘pure play’ hardware, software, storage and networking providers.

Robert Morgan, chief executive of outsourcing consultancy Morgan Chambers, warned that the plans to simplify the operating model were doomed to failure. ‘It’s a utopia and highly impractical to implement because clients want to be able to access the specialist business knowledge for their sector.

‘For customers the indication is clear that they are going to attack infrastructure outsourcing in a much more aggressive way. There’s some clear indication that there will be fiercely competitive infrastructure pricing in the next few months to take account of EDS’s under-utilised infrastructure assets,’ Morgan added.

But Morgan described the distant relationship with EDS’s management consultancy arm as a missed opportunity. ‘We’re disappointed that there was no reference to better use of the consultancy talents of AT Kearney. That’s where IBM, Accenture and Cap Gemini Ernst & Young have the upper hand because it’s integrated into their approach.’

Anthony Miller, principal analyst at Ovum Holway, said AT Kearney might not be too happy about the changes: ‘Given that AT Kearney tends to lead its own consulting engagements, how comfortable they will be as the ‘front end of the horse being led by the back end’ is surely moot,’ Miller said.

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