CSC disappointed in NT loss

CSC disappointed in NT loss

Summary: Services giant CSC Australia is "disappointed" at losing IT outsourcing client the Northern Territory (NT) government to rival Fujitsu but says the switch does not represent a general willingness on the part of customers to ditch incumbent suppliers. The territory last week confirmed it had awarded an AU$150 million four-year desktop and helpdesk services contract to Fujitsu, which will take over after CSC's five year contract to provide the services expires 29 June.

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TOPICS: Outsourcing
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Services giant CSC Australia is "disappointed" at losing IT outsourcing client the Northern Territory (NT) government to rival Fujitsu but says the switch does not represent a general willingness on the part of customers to ditch incumbent suppliers.

The territory last week confirmed it had awarded an AU$150 million four-year desktop and helpdesk services contract to Fujitsu, which will take over after CSC's five year contract to provide the services expires 29 June.

      Mike Shove
"Yes, we're disappointed, of course we are," CSC's local managing director and chief executive Mike Shove said in an interview with ZDNet Australia yesterday.

Shove said CSC was expecting staff previously involved in providing services "will move to the new providers" and that as the state government was CSC's largest single customer in the territory, his company's operations there would certainly decrease in size.

The chief executive echoed the government's comments that CSC would cooperate as Fujitsu took over the work. "I think we can get as good a reference exiting well with an organisation," he said. "So we're not going to leave them high and dry at all."

But Shove disagreed with the NT government's ICT tenders office project director Brad Irvine's comments last week that the territory's historical trend of not renewing incumbent ICT suppliers was representative of a more mature customer base that was more willing to dump incumbents.

"It is interesting that they haven't renewed a single contract with anyone, which tends to be contrary to what most organisations do," said Shove.

"Generally the customer has to be disappointed to move. Some like to move just to move, looking for a change. But generally if you look over the last year or two, you don't see that many that have genuinely shifted."

According to Shove, large organisations were more likely to be starting to break up their "big bang" large outsourcing contracts into smaller component parts.

"We're certainly seeing more and more selective sourcing, smart sourcing, outtasking -- whatever buzzword you want to use -- in the market," he said.

"That's creating more opportunities. So there's less of these very large big bang outsourcing deals to chase, but there's more small deals to do."

Shove mentioned the likelihood of the Commonwealth Bank breaking up its "huge deal" with supplier EDS as one example.

"The expectation is that it will get chopped up into three or four different pieces, and they'll look for best of breed rather than give it all to one provider," he said.

Shove noted that CSC was speaking to the bank to see if there was a role for the services giant to play in the wake of the EDS deal. "As everyone is, I'm sure," he said.

The chief executive said the changed industry dynamic was a double-edged sword. "There's more competition, because the deals are smaller, that allows more people to participate, though there's more of them," he said.

Another trend Shove sees building momentum in the Australian marketplace is offshoring -- where some work is completed in low-cost centres like India. However he noted there wasn't as much offshoring going on as people thought there was.

In the end Shove is philosophical about the NT government deal. "The terms are getting shorter. This will come around quicker -- they only signed a four year deal," he said. "It was a five year deal before. In two and a half years, they're going to be talking again."

Some of CSC's other local customers are resource giants BHP Billiton, Xstrata, Rio Tinto, the federal Department of Immigration and Multicultural and Indigenous Affairs, manufacturers BlueScope Steel, OneSteel and Alcoa, and financial giants AMP, GE and Allianz. "QBE was a good win for us this year as well," said Shove.

Topic: Outsourcing

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