Telecom boosts Gen-I subsidiary

Telecom is shifting management of its desktop environment to new subsidiary Gen-I, but the move won't result in less work going to IT services provider EDS, it said.

Telecom's information systems general manager Paul Knight said that, while EDS was Telecom's primary outsource provider, it has always subcontracted out much of the physical support work to other companies, including Gen-I.

"This displaces some services EDS used to buy in the marketplace from Gen-I's competitors," he said. "It means [EDS] will no longer ask companies like Infinity to go into the building and service desktops."

The change was a result of Telecom's acquisition of two IT services companies - Gen-I and Computerland - and their integration into its Advanced Services business, Knight said.

"We need one solution in that space. Gen-i, Computerland and Telecom have different environments and, as we move people round, we need to migrate to a common desktop, LAN, WAN and so on."

Telecom has about 5000 desktops to manage, and the addition of Gen-I and Computerland staff takes the total to about 6300.

He said there was no significant cost difference in the change.

Telecom has also shifted support for its SAP applications back in-house.

"We brought some EDS people who were managing SAP back to Telecom. We thought that was more appropriate," Knight said.

He denied that EDS, which took over the contract from IBM Global Services in 1999, was on the outer at Telecom.

"It is the prime services supplier in the information systems space. It runs our data centre, our servers and most applications support."

In most large outsourcing contracts, such as Telecom's 10-year deal with EDS, the outsourcer tries to make much of its profit in the back half of the contract. Many of the costs are loaded into the early years, as the outsourcer buys existing infrastructure from the customer.

Telecom's acquisition of in-house IT services capacity is seen as a threat to EDS's position, despite protestations from both companies that nothing will change.

EDS referred comment to Telecom.