EDS Unveils Global Sourcing Strategy

Tied to the Best Shore strategy, EDS also said it was in final discussions for a much-needed, revenue-boosting, multibillion-dollar IT infrastructure and applications services contract with Alstom, a French energy and transport company.

The Best Shore philosophy is key to EDS' plans to improve profitability by shifting some contact center operations and applications services work to "high-quality, low-cost solution centers" around the world in 2003, said Dan Zadorozny, president of Applications Services for EDS Solutions Consulting.

Zadorozny said the initiative builds upon plans announced in October during EDS' third-quarter earnings call when the company lowered its profit expectations by about 80 percent. The news sent EDS stock tumbling. Shares of EDS were trading late Wednesday morning at $14.89, down significantly from a high of $72.45 during the past year.

The company said it expects Best Shore to help accelerate incremental revenue growth opportunities in such markets as CRM and desktops as well as the government vertical market.

Zadorozny said the Best Shore initiative will encompass an onshore/near-shore/offshore application development and delivery model through more than 90 dedicated solutions centers around the world. Clients will be matched according to specific geographic, technology and industry requirements.

"We've been doing this since 1990 but maybe haven't marketed it in the best way," said Zadorozny. "What we've realized is offshore is not only an appropriate approach in terms of certain clients such as Alstom, but it really needs to be broadened in its approach."

Zadorozny said a small percentage of layoffs are part of previously outlined plans over the next year, but EDS also expects to increase personnel and resources by 40 percent to support expected client demand for global sourcing.

Paula Kruger, president of Customer Relationship Management for EDS' Operations Solutions line of business, said EDS is committed to investing $100 million over the next five years in establishing state-of-the-art capabilities around the world. For instance, Kruger said EDS expects to open a new contact center in Mumbai, India, in spring 2003.

"This is a tremendous opportunity for us to provide our clients and prospective clients with a global network of contact centers," said Kruger. "We are really excited about the improvements we are going to be rolling out over time."

In addition to India, said Zadorozny, EDS has plans to open a near-shore facility in Canada and is exploring opportunities in China.

"We'll see where that takes us," said Zadorozny.

Meanwhile, as part of the tentative agreement with Alstom, if approved EDS would manage Alstom's IT infrastructure and applications in 14 countries, including Belgium, Brazil, Canada, France, Germany, Italy, Mexico, Poland, Portugal, Spain, Sweden, Switzerland, the United Kingdom and the United States. About 1,300 Alstom employees in these countries would be transferred to EDS as part of the deal.