EDS looks offshore to cut costs

Electronic Data Systems (EDS) has released details of its plans to rely more on facilities located outside the US to provide...

Electronic Data Systems (EDS) has released details of its plans to rely more on facilities located outside the US to provide application development and call centre services to users on a global basis.

EDS also said it will standardise its application services operations worldwide as part of the five-year, $100m (£63m) Best Shore effort. The strategy was designed to help give EDS "a consistent delivery model worldwide" for its services, said Paula Kruger, president of the company's customer relationship management division.

EDS currently supports customers through more than 250 facilities around the world, but Kruger said the hardware, software and service methodologies it uses sometimes differ from location to location. Many EDS customers have their own facilities around the world and want more consistency, she added.

As part of the Best Shore initiative, EDS plans to open a series of new offshore IT service centres. "We'll be looking at where are the optimal locations to serve clients, where they need it and when they need it," Kruger said.

A call centre is scheduled to open next spring in India, with about 200 workers, said Kruger. EDS hopes to expand this to 700 employees by 2004.

EDS signalled its increased offshore focus last month when it disclosed cutback plans after reporting third-quarter results that were well below expectations. The company said then that it would shift 1,500 US-based jobs to lower-cost facilities in other countries.

Best Shore also includes steps designed to rein in expenses. For example, Kruger said EDS officials hope that standardising the technology used in its facilities will result in cost savings that can help keep down the prices the company charges.

Andrew Efstathiou, an analyst at The Yankee Group, said EDS's standardisation strategy is similar to the approaches taken by other IT services providers, including IBM and Accenture. "Certainly, this type of co-ordinated delivery is not anything new," he said. "I would say EDS is promoting this... because they need to control their costs - and pricing as well."

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