Outsourcing: Kraft Signs $1.7B Deal With EDSBy Baselinemag | Posted 2006-04-28 Email Print
The $23 billion food company will outsource management of its information-technology infrastructure under a seven-year contract. Are outsourcing "megadeals" back in fashion?
EDS announced Friday a seven-year information-technology outsourcing contract with Kraft Foods, the $23 billion food company, worth an estimated $1.7 billion over that timemaking it the biggest deal EDS has ever signed in the consumer packaged goods industry.
EDS will assume responsibility for Kraft's I.T. infrastructure, providing a range of services including managing data centers, hosting, telecommunications and support services. As part of the contract, EDS will manage desktop computers and servers for Kraft's 60,000 employees worldwide. The companies said that about 670 Kraft employees will become EDS staffers.
According to Baseline's Top 10 Projects in '06 reader survey, outsourcing projects represent the No. 2-ranked category of spending for the year, with respondents expecting to spend an average of $8.22 million on outsourcing.
Meanwhile, research firm Gartner this week published a report indicating that the number of outsourcing "megadeals"those worth more than $1 billion to a single supplierare on the wane. In 2005, according to Gartner, 11 megadeals were awarded, down from 12 in 2004 and 16 in 2003. Still, the research firm expects the outsourcing market to continue growing at a rate of 7.3% from 2004 through 2009.
According to EDS, the contract with Kraft is the largest one it's ever signed with a consumer packaged goods company. Plano, Texas-based EDS has 200 consumer and retail industry clients, worth more than $1 billion in annual revenue for EDS.
EDS said several of its partnersincluding Cisco Systems, Dell, EMC and Microsoft"collaborated" on the Kraft contract and will play key roles in providing hardware and software on the engagement.
In February, EDS was one of the six recipients of General Motors' information-technology outsourcing contracts, worth an estimated $15 billion over the next five years. The others were Capgemini, Hewlett-Packard, IBM, Compuware's Covisint subsidiary and Wipro.