EDS Bullish On Outsourcing

integration giant.

EDS sees 28 megadeals in the pipeline this year, with the total contract value at about $48 billion.

"This is a great, great business to be in," Brown told analysts last week at an annual gathering at the company's headquarters here. "The industry is terrific. We are bullish on the future."

Brown's optimistic outlook comes at a time when many high-tech companies are reporting declining sales. EDS' chief competitor, $35 billion giant IBM Global Services, posted a 1 percent drop in sales for its most recent quarter.

EDS expanded its sales team by 50 percent to 700 in the fourth quarter of 2001, said Doug Frederick, president of the integrator's Information Solutions outsourcing unit, which posted a 15 percent sales gain in the quarter. To build on that growth, the company is focusing its top sales talent on snaring outsourcing megadeals, he said.

The company's latest big outsourcing win came last week. The state of Kansas awarded EDS a six-year, $160 million contract to transform the administrative and operational processes that support its Medicaid program.

In battling IBM's services arm, EDS has sharpened its focus on service excellence and customer satisfaction plus turned up the heat on pricing, Frederick said.

"Nobody wants to win a losing deal," he said in response to a question on whether EDS was bidding deals below cost. "We want to win deals that have margin. We want to be able to price below our competitors and make more money than they do."

Other solution providers also have moved to cash in on the strong demand for IT outsourcing. Keane, for one, last week unveiled plans to acquire SignalTree Solutions Holding, an Irvine, Calif.-based company with two software development facilities in India and additional operations in the United States.

"Virtually all of our customers are seeking ways to improve efficiencies and lower costs. This is helping to fuel the growing market for application outsourcing," said Brian Keane, CEO of Boston-based Keane. Revenue from Keane's Application Development Management outsourcing business climbed 5 percent, to $95 million, in the company's most recent quarter, he said.