EDS reassures Aussie clients

The Australian division of Texan IT services giant EDS has sent its major local clients letters assuring them that its US$13.9 billion acquisition by Hewlett-Packard wouldn't result in a drop in service levels.

A spokesperson for the Australian Taxation Office, one of EDS' largest Australian clients told ZDNet.com.au that it had today received a letter from EDS' current managing director Neil Emerson, stating that existing agreements would be honoured and that service levels would be maintained.

The news came just hours after HP's global office said it had officially closed the acquisition, which in Australia will mean that HP's South Pacific division will swallow EDS Australia.

Australian spokespeople for both EDS and HP today declined to comment on what impact the deal would have in Australia, saying they had been gagged from speaking to the press by their US offices.

It remains unclear who will lead the merged entity in Australia, however globally HP said it had appointed former Westpac technology chieftain Michael Coomer to the role of senior vice president for HP's Asia Pacific and Japan operations. Coomer had held a similar role at EDS.

The US$13.9 billion merger with EDS is the second largest acquisition it has completed since its rocky 2002 merger with Compaq. This merger is aimed at helping HP compete with IBM for major outsourcing deals.

The merger will see HP inherit several major Australian clients, including the Australian Tax Office, the Commonwealth Bank, the South Australian Government and recently signed client Tabcorp — the company's only major "mega deal" since state and federal government agencies begun so-called multi-sourcing outsourcing strategies.

The ATO has been the largest client of EDS to break up its contracts with EDS. This year it broke its IT infrastructure outsourcing contracts into three bundles that were worth AU$1.8 billion to EDS over the past five years.

EDS was excluded from the ATO's managed network services and end-user computing contracts, but gained a spot to compete for its centralised computing contract — a five year deal worth around AU$160 million a year when EDS's agency-wide contract ends in 2010.

EDS has also been squeezed in the Australian financial sector, with the Commonwealth Bank late last year announcing it would gnaw off around AU$1 billion worth of application development and maintenance work that EDS previously held, which is now bid for by a panel that includes IBM, Tata Consultancy and HCL.

The news comes as EDS Australia's heavily unionised workforce has not yet started airing any issues associated with the Texan outsourcing giant's US$13.9 billion acquisition by Hewlett-Packard, according to a key union representative.

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