Telecom Teams With EDS, MS on Outsourcing Deal

Telecom New Zealand has awarded its NZ$1.5 billion (US$797.5 million) information systems outsourcing contract to Electronic Data Services Corp. (EDS) and Microsoft Corp.

The 10-year agreement covers all of Telecom's IS services and online solutions.

What Telecom is calling the largest outsourcing deal in New Zealand history will also be accompanied by an agreement to work with Microsoft to develop and deliver online solutions to Telecom customers.

Telecom will take a 10 percent stake in EDS New Zealand "to give a strong underpinning to the partnership", says Telecom Chief Executive Rod Deane, and has the option of lifting its stake to 49 percent.

The purchase is under due diligence, but is expected to be complete by the end of the year.

Telecom also has the right to appoint two EDS New Zealand executives. The alliance will have a major impact on EDS New Zealand, says Managing Director Steve Smith.

Telecom's 600 IS staff will be offered jobs, he says.

Deane says the choice of partner was difficult and Telecom recognized the substantial resources both EDS and IBM had put into their bids.

Microsoft New Zealand Managing Director Geoff Lawrie says his company is very excited about this alliance.

"It will expedite the convergence of PC and telecommunications technologies for New Zealanders," he says.

"With the expertise Microsoft has in online technology and the strength of our commitment to R&D, this agreement with Telecom and EDS will help create an environment that fosters the growth of advanced technology in our country," says Lawrie.

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