Bridging the `impact gap' I T CONTRACTING

Laurence Blackall charts the rise of EDS

Many companies have grown great on the back of the trend towards Information Technology outsourcing. None has grown greater than EDS, founded some 30 years ago by the one-time US presidential candidate Ross Perot and owned since 1984 by General Motors. Turnover last year increased by 17 per cent over 1993 in what the company would probably call a banner year; and the growth rate looks likely to continue. A key factor in this performance was the $3.2bn contract to operate Xerox Corporation's global

computer and telecommunications network.

Now EDS has taken the UK by storm, and claims to be the biggest IT group in the country. Revenues have soared past the £300m mark during the past 12 months, with new business being won in a variety of sectors. Much of this has come from the transport sector, EDS's longest suit. Clients include the Civil Aviation Authority, the Driver and Vehicle Licensing Authority, the Department of Transport and London Underground.

EDS's biggest UK project, and the IT industry's most talked-about deal in 1994 was the £1bn, 10-year service contract signed with the Inland Revenue. Under the terms of the contract, which is expected to save up to 20 per cent of the Inland Revenue's information technology support budget, 1,900 staff will transfer to the EDS payroll. Without the experience and skills of those staff, EDS concedes that it would have been difficult to fulfil the contract. For many of them, however, it provides access to career opportunities that would have been unimaginable with their former employer.

While EDS has an enviable track record in central government business, where its clients also include the Department of Social Security, the Ministry of Defence and the Home Office, it has not until recently had much involvement in local authority work. But three weeks ago Brent Council awarded EDS a £50m contract to run its revenue and benefit service. This involved the transfer of 240 staff and promised significant savings, estimated at around £1m a year.

EDS has no misgivings about putting its money where its mouth is. The company more than doubled its share of the UK market with the acquisition of SD-Scicon in 1991, and has been quick to recognise opportunities since then. One such opportunity was the acquisition of DVOIT, the IT division of the Driver and Vehicle Licensing Agency, which was the first Government Executive Agency to be privatised. Even more imagination went into the deal that EDS crafted with Lucas Industries. This was a complex arrangement which combined a £500m, 10-year IT outsourcing contract with the acquisition of two Lucas subsidiaries, Lucas Engineering and Systems, and Lucas Management Systems.

So what is the secret of its success? Well, according to EDS, the rate of technology change is outstripping the users' ability to apply that technology, creating what the company calls the "impact gap". By applying a blend of pragmatism and innovation, EDS helps its customers to narrow this gap.