EDS secures US$70 million Telecom deal

By Peter Griffin

IT services heavyweight EDS has extended its relationship with Telecom, picking up a US$70 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 AAPTnte 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 services it adds and will 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. There will be some services provided from here," he said.

Three IT suppliers are understood to have been shortlisted for the contract, though Ellis would not say who they were.

While Telecom is crowing about the efficiencies it will gain from farming out its IT requirements to EDS, lower level employees at Telecom fear AAPT employees will experience the same headaches associated with outsourcing many are currently experiencing here. Telecom staff who did not want to be named said they remember better IT service when Telecom managed its IT network inhouse. They point to a growing reluctance to update old computer equipment, poor service from EDS support staff and a lack of a cohesive IT strategy.

The concerns were raised at a recent Telecom roadshow in Auckland where Telecom chief executive Theresa Gattung, addressing an audience of staff at the Sheraton, was challenged about faults in the IT contract.

One customer services employee said the best Telecom IT staff had been cherry-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.

In August Telecom extended a US$800 million, 10-year deal signed with EDS in 1999 for IT outsourcing, adding a US$133 million, three-year extension pushing the contract out to 2012.