Terra rips up EDB IT services contracts

Terra rips up EDB IT services contracts

Nordic banking group Terra-Gruppen has ripped up its current contracts with IT outsourcer EDB Business Partners and called for better prices and improvements in service and delivery quality.

Terra-Gruppen has given notice to terminate its current contracts with EDB Business Partner with effect from end-2004 and end-2005. The Nordic banking group currently has seven contracts with companies in the EDB Business Partner group (EDB).

Terra has asked EDB to make fresh bids for the services covered by the contracts, focussing in particular on competitive prices and improvements in service and delivery quality.

Ole Urdahl, executive vice president, bank & finance, EDB Business Partner, comments: "Terra has told us that it is not satisfied with its current relationship with EDB. This is something we take very seriously, and we intend to start work immediately on producing a new proposal."

Should the new bids fail to satisfy the bank, the early terminations will cause a shortfall in EDB turnover of NKr150 million in 2005 and Nkr200 million in 2006. If accepted, the contractual relationship with Terra may be extended to cover the period through to end-2010.

The loss of the business will be a blow to the struggling IT services firm, which has been hit hard by the current economic downturn. EDB announced plans earlier this month to cut 140 jobs from its business and finance division as part of an ongoing restructuring and downsizing programme. This followed the closure in June of its consultancy business resulting in the loss of 150 jobs.

Says Urdhal: "I believe that the process of change we have instigated for Bank & Finance is moving our business in the right direction, but I also recognise that we still have some way to go to actively demonstrate this to our customers."

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