Telecom farms out transtasman IT needs

By PETER GRIFFIN IT writer

IT services heavyweight EDS has extended its relationship with Telecom, picking up a US$70 million ($135 million) deal to manage the telco's Australian IT needs for the next decade.

But much of the revenue from the deal will flow to EDS Australia, which will be responsible for servicing AAPT on a daily basis.

EDS New Zealand chief executive Rick Ellis said accountability for the deal would ultimately lie with EDS headquarters in Wellington. The New Zealand operation would generate revenue from any additional services and would send people to Australia as part of the contract.

"If we, for example, were to provide a technical call centre out of New Zealand, revenue from that would come to EDS New Zealand," he said. "There will be some services provided from here."

Three IT suppliers are understood to have been shortlisted for the contract.

While Telecom is crowing about the efficiencies it will gain from farming out its IT requirements to EDS, lower-level employees fear AAPT employees will experience the same headaches many are experiencing in New Zealand.

Telecom staff who spoke to the Herald but did not want to be named said the IT service was better when Telecom managed its IT network inhouse.

They pointed to a growing reluctance to update computer equipment, poor service from EDS support staff and lack of a cohesive IT strategy.

One customer services employee said the best Telecom IT staff had been picked to work for EDS, leaving a hole in IT knowledge at Telecom which was not plugged when EDS came on board.

About 42 AAPT employees will move to EDS Australia as part of the deal.

But Telecom is extremely happy with EDS. In August it extended for a further three years a US$800 million, 10-year deal signed in 1999 for IT outsourcing.