EDS wins $365m IT outsourcing deal

EDS has won a $365m IT outsourcing deal with US human resources consulting firm Towers Perrin.

In addition to the 10-year outsourcing deal EDS has boosted its HR and payroll outsourcing operations with the $420m acquisition of a majority stake in Towers Perrin's HR administration services business.

EDS will support and manage Towers Perrin’s global network, desktop and hosting environment as well as developing and managing selected applications for the firm.

Tony Candito, CIO at Towers Perrin, said the deal will provide the company with a flexible IT environment that will allow it to meet current business requirements and future challenges.

The HR acquisition creates a $600m HR business process outsourcing (BPO) business, with EDS holding an 85 per cent stake. The new unit will be led by Steve Bohannon, EDS' VP of HR services, and governed by a board of directors representing both companies. The transaction is expected to close by the end of the first quarter of 2005.

Phil Codling, analyst at Ovum Holway, said the move underlines the seriousness of EDS' intent in the emerging HR BPO market and that it should help EDS compete against HR-centric services firms as well as more traditional foes like Accenture and IBM.

"EDS' bold strategy for HR BPO makes sense in its particular case, since it already has a good starting point in the market. As the HR BPO market starts to take off and offer more opportunities in the US and - albeit more slowly - in Europe, this is a competitive gap that EDS is aiming to fill," he said.