EDS, Volante tipped to beat HP to South Australian contract

Summary:Electronic Data Systems appears to have jumped the final hurdle, knocking Hewlett-Packard out of the race for one of the juiciest South Australian government outsourcing contracts -- distributed computing support services.According to industry sources, the big Texan will share the haul with Volante, which reportedly has won the other half of the contract, said to be worth up to AU$200 million a year in total.

Electronic Data Systems appears to have jumped the final hurdle, knocking Hewlett-Packard out of the race for one of the juiciest South Australian government outsourcing contracts -- distributed computing support services.

According to industry sources, the big Texan will share the haul with Volante, which reportedly has won the other half of the contract, said to be worth up to AU$200 million a year in total.

It's unlikely the contract will create any further jobs for the State as the incumbent outsourcer has reportedly trimmed down considerably over the past two years, losing around 100 staff, mostly by attrition.

South Australia has lost hundreds of skilled IT positions over the same timeframe.

Highly skilled semiconductor engineers are still on the streets following the closure of Motorola spin-off Freescale in January, with 145 jobs lost.

Although the AU$40 million Dimension Data contract for network management, announced by ZDNet Australia on Friday, is said to be creating 24 "new" jobs in the State, local industry commentators say the jobs are simply being reallocated from KAZ and EDS.

"The ICT Council supports the creation of jobs for the State, however the contracts such as EDS and Motorola have simply not delivered the promised economic development," said Mr David Raffen, Chairman of the ICT Council for South Australia.

"My problem is not with multinationals winning the large contracts, but with the fact that the government does not appear to have a long-term strategy to strengthen the local industry based on local intellectual property."

Distributed computing is part of ICT4, widely regarded as being the showstopper contract round, representing the lion's share of the original AU$565 million nine-year EDS deal. At the time of signing nearly 10 years ago, it included a substantial requirement to support local industry development.

Another industry source said he was astounded with the decision to select EDS over HP, based on HP's business model which is inclusive of local systems integrators.

EDS on the other hand does not have a channel delivery model in Adelaide.

ZDNet Australia reported last month that the SAG mainframe contract would remain with EDS until 2007, when all the ICT contracts are expected to be realigned.

According to acting Infrastructure Minister Jay Weatherill, official announcements about the mainframe and ISP contracts will be announced over the next few days.

David Thompson, marketing manager for EDS in South Australia, said that company policy prevented him from commenting on their client's business decisions or on its own internal operations. He said the company maintained around 2,000 staff in Adelaide.

Topics: Outsourcing, Government : AU, Hewlett-Packard, Legal

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