EDS Wins $1 Billion Outsourcing Deal With German Retailer
Outsourcing company takes over retailer's corporate and department store tech operations for eight years.
Electronic Data Systems said Monday that it has won a contract worth about $1 billion to provide a range of technology services to KarstadtQuelle, one of Europe's largest operators of retail and travel outlets.
EDS also will take a 74.9% stake in Itellium, KarstadtQuelle's in-house IT subsidiary.
Under the contract, EDS will manage KarstadtQuelle's business applications and technology infrastructure for the next eight years. The deal covers KarstadtQuelle's corporate locations and department stores across Germany. EDS also will provide tech services for KarstadtQuelle's Primondo mail order business.
French outsourcer Atos Origin will continue to provide KarstadtQuelle with network services under an existing agreement.
KarstadtQuelle said it expects to save about $850 million on IT costs over the life of the deal with EDS.
EDS said it plans to modernize Itellium's computing systems to create a new outsourcing center that will serve KarstadtQuelle and other European retailers. Itellium currently employs about 700 workers. In a statement, KarstadtQuelle said it plans to retain a 25.1% stake in its service arm to maintain "influence on Itellium's business policy."
U.S. outsourcers appear to be taking stronger interest in the back-office IT departments of large European businesses with an eye to converting them into outsourcing operations.
Last month, IBM said it would take management control of Unicible, the internal tech operation at Switzerland's Banque Cantonale Vaudoise. IBM said it plans to use Unicible's assets to create broader tech services offerings for banks in Europe.
EDS shares (NYSE:EDS) gained 1.05% Monday to close at $27.78.