EDS wins seven year Phoenix Companies contract

EDS wins seven year Phoenix Companies contract

EDS has won a seven year IT outsourcing contract worth $122m with US insurer and wealth management services firm, Phoenix Companies Inc.

Under the deal, EDS will provide Phoenix Companies with infrastructure services including management of mainframe and desktop computers; mid-range servers and enterprise storage; digital printing; IT service centre/help desk; network and telecommunications operations; security services and disaster recovery.

Under the agreement, approximately 50 Phoenix employees will transfer to EDS. The move to the EDS infrastructure will take place over the next six to nine months and is expected to be completed by the second quarter of 2005.

Phoenix will continue to maintain certain in-house IT functions, including Web and application development, IT architecture and a project management office.

Commenting on the contract, Dona Young, chairman, president and chief executive officer of Phoenix, says: "EDS' technology expertise, processes and tools will give us greater flexibility to meet the changing demands across our business lines, and the resulting cost savings will contribute to the company's financial performance."

Phoenix says it expects to realise savings of $65 to $70m over the course of the seven-year contract, excluding after-tax transition costs of $10 to $14m, to be incurred through early 2005.

The news follows reports that EDS is paying $135m to terminate a loss-making IT outsourcing contract with an unnamed customer. The Financial Times says the move is part of EDS' effort to restructure unprofitable contracts. The company made an operating loss on the contract of $57m in the three months to June. A further $90m loss is expected in the second half of the year and $20m in 2005.

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