EDS Wins $1.3 Billion Outsourcing Deal with ABN

Amsterdam’s ABN AMRO Bank said it has awarded IT services giant Electronic Data Systems a five-year, $1.3 billion (U.S.) outsourcing contract to assist with its wholesale client strategic (WCS) business unit.

The unit provides investment banking services to corporate, institutional and public sector clients worldwide. The company said the contract involves EDS providing technology services and applications development in the major countries in which WCS operates. As is customary in major outsourcing contracts, ABN AMRO would be expected to transfer some of its employees to EDS as part of the arrangement, as it had indicated weeks ago as part of an announcement on job cuts in the division.

Outsourcing major portions of business processes has increasingly become a trend among major banks, with EDS and its outsourcing rival IBM notching their share of the outsourcing business. Earlier this month, EDS was awarded a $4.5 billion outsourcing contract with Bank of America, only a month after it lost out to IBM on a $5 billion outsourcing contract.

ABN AMRO said further details of the contract would be made available when it releases its annual results on February 13th, 2003. The contract can start once it meets with regulatory approval and advice from the workers councils, ABN AMRO said. That process is expected to begin over the coming weeks.

Separately, EDS on Monday settled a disagreement with bankrupt telco provider WorldCom regarding a contract dispute that became more complicated after WorldCom filed for bankruptcy protection in July of this year. A bankruptcy court judge in New York approved an agreement between the two companies that calls for EDS to pay WorldCom about $187 million in cash during 2003, and in turn lowers the rate that the Plano, Texas-based EDS was paying WorldCom for telco services.

During its third-quarter results, EDS said its profits were eroded in part because of its exposure to the bankruptcies of its clients WorldCom and US Airways.

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