No clarity on CSC's future

By Candice Jones for CSC
Johannesburg, 06 Mar 2008

Computer Sciences Corporation (CSC) SA will have to revisit its footprint in the country, after losing its biggest outsourcing contract with the Old Mutual group last month.

At the end of February, CSC lost an eight-year contract with the financial giant to outsourcing competitor T-Systems, which could put the company in hot water.

An investment analyst, who cannot be named, says CSC SA is facing a tough future. "The Old Mutual deal represented 90% of the company's local revenue and having lost that account it is fair to say that the company will have to re-evaluate its local presence."

He says, after CSC hands over the account to T-Systems, the company will have to start looking for new market opportunities.

MD of CSC SA Martin Vergunst declined to say how the company was dealing with the loss of the client, nor would he include details of any prospective or current clients.

Vergunst says: "We cannot comment further at this stage, other than to reiterate that CSC SA has enjoyed a successful relationship with Old Mutual for the past eight years and will continue to deliver services for Old Mutual's managed network services and will work co-operatively and professionally with T-Systems to transfer our Old Mutual services obligations."

It remains unclear whether CSC's US-based parent company will step in and provide support for the local arm. The US company recently received a $22 million modification to the National Aeronautics and Space Administration (NASA) Shared Services Centre contract to provide additional support services to NASA employees at Stennis Space Centre. The modification applies to a NASA contract signed in 2005, then valued at $230 million contract.

Committed to SA

However, Vergunst has hinted that the company is still afloat, saying, "CSC remains fully committed to continuing to deliver services and meeting all our current commitments to our other clients in SA."

According to the company's Web site, its other clients include SA Eagle, Nedcor, BHP Billiton, Absa, Woolworths and the Department of Public Works. However, no information was given regarding the size of these contracts. There is also no indication about how up to date this information is.

In June last year, the Old Mutual Group denied that its decision not to renew the contract with CSC was based on poor service delivery, saying it was satisfied with the services provided by the company.

Rose Keanly, MD of Old Mutual service, technology and administration, speaking at the announcement of the deal with T-Systems, paid tribute to CSC, saying that the company had been Old Mutual's partner for eight years, and that OM wished it all the best.

Keanly said that Old Mutual and Mutual and Federal had gone through a rigorous evaluation process after short-listing IBM, CSC, and T-Systems. The evaluation covered the technology solution, commercial factors and risks inherent in such a deal. "We did the evaluations and T-Systems came out tops."

* Additional reporting by Samantha Perry