IBM ousts EDS in Certegy outsourcing deal

IBM ousts EDS in Certegy outsourcing deal

IBM has won a ten-year, $150 million IT outsourcing deal with payments processor Certegy, ousting incumbent US supplier EDS.

IBM, which currently provides IT services to Certegy's UK and Australian operations, has been contracted to consolidate, automate and manage a large portion of the company's mainframe operating systems and hardware operations in the US.

Under the agreement, Certegy will pay IBM according to the volume of services it consumes.

Certegy says it will record a pre-tax provision of up to $10 million in the first quarter of 2003 for early exit costs associated with severing the current EDS services agreement.

Lee Kennedy, chairman, president and chief executive officer of Certegy, comments: "The early exit costs to be recognised in connection with terminating the EDS agreement represent an investment in our future that is projected to generate an internal rate of return of more than 20% over the next ten years."

The conversion to IBM is scheduled to be completed by the end of the third quarter of 2003.

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