CSC is splitting itself in two to make its sale easier, according to sources, with Indian supplier Wipro touted as a buyer.
The company will split into CSC US Public Sector and CSC Global Commercial, with the latter focusing on enterprise and non-US public sector sales.
The supplier has contracts in the US which are related to national security, such as working for the US army and navy, so handing this over to another supplier would be complicated and unlikely if it was a foreign buyer.
Robert Morgan, director at IT outsourcing consultantcy Burnt-Oak Partners said the move sets CSC up for acquisition by two seperate companies, with an Indian supplier taking the Global Commercial operation and a US supplier taking over its US Public Sector business.
“It will be highly likely that an Indian supplier will buy CSC’s Global Commercial business and another its US Public Sector business. My bet is that Wipro will buy the global business," he said.
European head at Indian supplier Tech Mahindra, Vikram Nair, said CSC has been looking for a buyer for a while. “It could be acquired by private equity or an Indian supplier,” he added.
Read more about CSC
- US IT services company CSC has been quiet in the UK, but with a new team in place, partnerships set up and technology acquisitions completed, it is targeting growth in the private sector
- Systems integrator Computer Sciences Corp is planning to split its commercial technology division from its government business, according to unconfirmed reports
- Beleaguered software firm CSC has returned to profitability in its full year results, posting operating profits of $900m (£600m) compared with losses of $1.36bn for the previous year 2011-12
According to IT outsourcing advisor Jean Louis Bravard, Wipro has been outperforming the market and is the natural buyer of CSC.
On the split, CSC CEO Mike Lawrie said the firm began its turnaround three years ago.
“That turnaround has progressed strongly, and our focus now turns to positioning the business for long-term growth and leadership. The best way to accelerate that transformation is by separating the company into two businesses, each uniquely positioned to lead its market by focusing strongly on the needs of its clients," he said.
CSC said the separate companies will be more competitive and will attract better IT staff when separate: “The market for talent has become highly competitive. As two independent, focused and market-leading organisations, each business will be better positioned to recruit and retain the best IT talent.”
CSC was not available for further comment at the time of writing. Wipro said it does not comment on market speculation.