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Story URL: http://management.silicon.com/government/0,39024677,39123263,00.htm

EDS countersues BSkyB in £60m contract row
Ding ding, round one…

By Andy McCue

Published: Wednesday 18 August 2004

EDS and BSkyB are locked in a bitter legal wrangle over a disputed £60m CRM contract that could cost tens of millions of pounds.

BSkyB has followed through on the threat made in its recent annual report and filed a lawsuit against EDS alleging "deceit, negligent misrepresentation and breach of contract".

But now EDS has upped the ante by countersuing the satellite TV group.

The wrangle is over a £60m contract won by EDS in 2000 to design and build a CRM system for Sky's call centres. EDS pulled out of the deal in 2002 citing unmanageable changes to scope and business transformation requirements, but BSkyB alleges EDS only got the deal because of "fraudulent representations" that were then not met.

It is understood EDS' counter claim regards unpaid bills running into millions of pounds.

A year and a half later, BSkyB is still working on the CRM system having invested £170m since 2000, and CEO James Murdoch has committed a further £50m in the next few years.

BSkyB is not saying how much it is looking to recoup but industry watchers estimate it will run into the "tens of millions" of pounds.

Phil Codling, an analyst at Ovum Holway, said such public disputes rarely benefit either party and that the project in question was a classic case of "scope creep".

"It’s always rather depressing to report on such wrangles between suppliers and customers. We hope that these two mighty firms will come to their senses and resolve all this without a reputation-bashing court case. But given the kind of rhetoric now being aired in public by both sides, this hope looks increasingly forlorn," he said.

EDS has previously told silicon.com it will "vigorously defend" any action by BSkyB.

Seperately, EDS has said it plans to make India its global hub for BPO operations by moving 25 per cent of its workforce there. The company currently employs 1,400 people in India at its four centres in Chennai, Gurgaon, Mumbai and Pune.