IT firm heading into HP merger

By ADAM GIFFORD

The long-underperforming New Zealand arm of Computer Sciences Corporation looks set to become part of Hewlett Packard's consulting and services operation.

CSC New Zealand managing director Kimbal Riley said the companies had been talking for several months, and hoped to finalise the deal by the end of August.

CSC, one of the world's largest IT companies, had worldwide revenues last year of $US10.5 billion ($26.8 billion).

The Australian operation, which employs 4500 of the company's 68,000 staff and has a strong outsourcing and application development business, was a strong contributor. New Zealand, with 92 staff, hardly registered.

Mr Riley said CSC's business model relied on very large customers with big , complex systems.

"The New Zealand marketplace doesn't support a large number of those sorts of businesses," he said.

CSC NZ customers are mainly in the healthcare sector, a legacy of its origins in bureau company Paxus. The company came under the CSC umbrella in 1996 as the result of an international acquisition.

Mark Bowman, the general manager of Hewlett Packard's solutions business, said the acquisition would fit HP's global strategy.

"We have a total business which looks at all customer transformation from a product and services point of view. This will deliver local services capability in key areas," he said.

One local systems integrator said growth in HP's service capacity could be seen as a threat.

"HP has always been known as an honest vendor. Because they're not competing on services, they're very easy to work with. I hope that doesn't change."