Table Of Content

March1993 Vol.IV,No.3 OSP APublicationfromINPUT’SOutsourcingInformationSystemsProgram CSC Moves Out in Two International Markets BetweenNovemberandearlyFebruary,CSC vendorissucceedingintheinternationalmarket announcedtwomajoroutsourcingcontracts almostassoonasitstartssucceedinginthe outsidethecontinentalU.S. Justtwoyearsago, domesticmarket. CSCwasstilltryingtodiversifyfromitsstrong positioninthefederalmarketintocommercial SuccessintheU.K. markets. Nowitisdiversifyingevenfurther, demonstratingthattheinternationaldemandfor CanweexpectmorefromCSCinthe outsourcingisstrong,atleastintheU.K.and internationalmarket? Indeed,inearly Australia. February,itannouncedanagreementwithBhS, aleadingU.K.clothingretailerwith130stores AustralianInsuranceDeal inthatcountry. TheagreementcallsforCSCto managethedatacenter,developnew InearlyNovember1992,CSCannouncedthat applicationsandmaintainandenhanceexisting ithadamemoofunderstandingwithAustralian software,aclassicapplicationsoperations MutualProvidentSociety(AMP)inSydney, arrangement. Thoughthecontractvaluewas Australiatoprovideoutsourcingservicestothe insuranceconglomerate. Thisisavery cacoqmupilsiictaitonedofdeCalS,CinAvuosltvrialniganboytoCnSlyCtihnethe Exhibit1 U.S.,nowawhollyownedsubsidiaryofAMP, CSC’sInsuranceDeal butalsotheabsorptionofAMP’s600ISstaff bofytChSeCa.greEexhmiebnitt.1illustratesthemajoraspects •100employeesfromCSCAustralia Thevalueofthecontractovertheten-year •600employeesfromAMP periodisexpectedtobe$1.5billion,certainly thelargestcontractyetawardedinAustralia. •Ten-yearcontractterm Thoughthedealhasbeenpubliclyannounced, itisstillsubjecttosigningofadefinitive •$1.5billioncontractvalue agreementbecauseoftheregulatoryissues innovtoclhveadn.geItfhtehefafcitnatlhattetrhmisscUh.aSn.goeu,ttshoautrwciilnlg Source: INPUT ©1993byINPUT.Reproductionprohibited. notreported,itdoescontainaclausestating inthepast. Bothretailingand,toalesser thata30%reductionofBhS’scomputingcosts extent,theinsuranceindustryhavebeenfertile fromthecurrentlevelisguaranteed. The marketsforsomevendors,butCSCdidnot contractisfor11yearsandincludesthetransfer standoutasoneoftheseintheU.S. of115employeestotheCSCpayroll. Exhibit2 summarizestheterms. CSCwassuccessfulintheseinternational dealsbecauseithadgoodmarketing organizationsinplaceinthosecountries andbroughtahighlevelofperceived Exhibit2 expertiseinoutsourcingtothetable. CSC’sRetailDeal ApparentlyprospectsintheU.K.and Australiamaybemoreinterestedin •Eleven-yearcontract touurtnsionugrcoivnegretxhpeeirrtoprearthaetriotnhsantoaann •Thirtypercentsavingsguaranteed ibnosduerawneclelofroraEreDtSailaenxdpePretr.otTShyisstmeamsy, whichareveryactivelypursuing •Applicationsoperationsoutsourcing internationalopportunitiesalso. -Platformoperations WhatIs“International”? -Applicationsmanagement Bothoftheseawardsmaybemislabeled bycallingtheminternationalsuccesses. •115employeestransfertoCSC Afterall,theyarereallyonlyoutsourcing awardsinonecountrygrantedtoan •Datacenterandnetworktransfer Touhtastoiusrvcienrgyvseignndiofircafnrto,mbuatnowthhaetrcwoiullntbrey. trulysignificantiswhenoneoutsourcing Source: INPUT vendortakesovertheoperationsofboth domesticandinternationaldivisionsfora corporation,includingitsnetwork VanHoneycutt,PresidentofCSC’sIndustry management. Therearevendorsinthemarket ServicesGroup,said: “Thisisoneofthemost whocandoitnow,atleastonatechnological significantoutsourcingcontractseverawarded front. Themanagementproblemswillbe intheU.K. ItwillallowBhStofocus daunting,butwillbemasteredbecausethistype exclusivelyonitscorebusinesswhilerelying oftrueinternationaloutsourcingisinevitablein onCSCtoprovidetheinformationtechnology viewoftheincreasedglobalizationofbusiness. supportsocriticaltosuccessintoday’s marketplace.” ReasonforSuccess Inbothofthesecases,CSCisenteringa verticalindustrythathasnotbeenitsstrongsuit ThisResearchBulletinisissuedaspartofINPUT’SOutsourcingInformationSystemsProgram 1953fGoarltlhoewisnRfooparlemdaa,steSiuocinatlesle5yr6vo0iu,creVslioiecnandlnuasI,tNrVyP.AUTI2fo2yr1og8ua2n,hiazTvaetelieqopunheosortnieJo.nP(.s70Ro3ir)cch8oa4mr7md-e6a8nt7tI0sN,PoFUnaTxt,hi(s70b3ul)le8t4i7n-,6872. 2 ©1993byINPUT.Reproductionprohibited.