Electronic Data Systems (EDS) has restructured globally into fives. regional divisions as it battles for leadership of the UK services market, having already surrendered its mantle to IBM in the US.
The services company is also consolidating its existing e-commerce service offerings worldwide into a $2 billion e-business unit with 20,000 employees.
EDS' decision to replace its former strategy of focusing on specific industry markets comes in the wake of a poor first quarter, which saw profit decline 14 per cent from the corresponding period in 1998.
The company had already announced a $1 billion cost-cutting strategy that included the loss of 5,200 jobs worldwide, following the release of the results (PC Dealer, 5 May).
According to analyst Richard Holway, the UK division of EDS was the vendor's strongest performing subsidiary in 1998, but it is likely to be overtaken by IBM Global Services within two years. The preliminary findings of The 1999 Holway Report showed that both companies achieved revenue in excess of £1 billion last year.
While IBM GS increased UK turnover by 38 per cent during the 1998 financial year, EDS UK increased its annual revenue by 27 per cent. The report claimed IBM GS should maintain revenue growth of 30 per cent in the UK throughout 1999, buoyed by a number of key outsourcing contracts, including a 10-year, £1.8 billion deal signed at Cable & Wireless Communications in September.
According to an internal memo to EDS UK staff, there will be a 'small-scale elimination of positions on individual accounts' in the subsidiary, but redeployment will be sought for those who are made redundant. The memo also claimed that about 700 vacancies are to be filled in higher growth areas by the end of June.
Dick Brown, chairman and chief executive of EDS, said of the vendor's global restructuring: 'We will not be satisfied until we regain our leadership position in the industry we founded.'
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