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RealTime IT News

EDS Inks IT Services Deal with General Motors

Electronic Data Systems (EDS), a global service provider with a propensity for picking up information technology contracts with large companies or organizations, this week scored another such deal with General Motors (GM) when it agreed to offer manage the car manufacturing giant's desktops for the next three years.

Financial terms were not made public for the deal, which warrants that Plano, Texas-based EDS will provide hardware, software and support to more than 80,000 employees at GM to fortify its digital business capabilities.

EDS will be responsible for managing the hardware and software GM already has in place, including products and applications from Microsoft Corp., Lotus, EMC Corp. and Compaq Computer Corp., among others. GM believes this will lead to increased productivity and will facilitate business collaboration among its workforce. Initial services implementation will begin in North America and could, in time, expand to other GM international locations.

Rick Sturgeon, process information officer for General Motors Information Systems & Services, said as much in a public statement: "The real significance of this agreement is our ability to foster collaboration globally while reducing the costs of executing our business processes."

EDS, which has scored multi-billion-dollar contracts from the likes of the U.S. Navy when technology business deals were ripe for the picking, is one of the few companies who can say they are enjoying the fruits of their services contracts.

On Wednesday this week, the firm announced a third-quarter profit, excluding one-time charges, of $334 million, or 69 cents a share, a penny better than the figures analysts polled by First Call estimated. Revenue rose 16 percent to $5.6 billion as EDS reported $6.8 billion in new contracts, including the new GM deal.

Indeed, to provide some perspective on how hot the market is for IT services despite the parched economy, the firm claimed it is currently pursuing 88 contracts, worth some $250 million each.

And while many of EDS' management and consulting firm brethren have gasped for air, market research firm IDC Corp. attested to the notion that those offering IT services could be well off in the bear market if they play their cards right; there is much money to be had. IDC said the slowing U.S. economy is having minimal effect on spending for IT services, as the worldwide market grew 11 percent in 2000 to reach $395 billion.

IDC believes another $305 billion will be added to its bottom line through 2005, bringing it to $700 billion.

"The downturn in the economy will affect each segment of the overall IT services industry differently. Some segments, like outsourcing, will experience a short-term activity spike. Others, such as consulting, will experience a brief setback," said Ned May, senior analyst with IDC's Worldwide Services Research program.