The early cancellation of the R1 billion 10-year contract that EDS had with Standard Bank means neither party will be "prejudiced", according to Craig Bond, director of Standard Bank Card Division.
Standard Bank has decided to terminate its contracts with EDS almost three years early after deciding on a change of strategy to take back its card processing services in house as it considers this a key competency. The contract will now end in August 2003.
Bond says Standard Bank has reviewed its service needs for itself and to its customers. "The bank has changed a lot over the past year and issues such as card processing are now definitely part of our core competency. We need to own that customer interface."
He says Standard Bank had no complaints about the service that EDS had delivered and insists the parting was amicable.
"Standard Bank and EDS management teams have been jointly planning the transition of these services back to the bank for some time. Final agreement was reached between Standard Bank and EDS on 10 July," Bond says.
In terms of the cancellation, about 300 full-time EDS staff will move over to Standard Bank, including many who had been transferred to EDS when it won the contract in November 1996. "We are taking over the whole service lock, stock and barrel," Bond says.
EDS communications manager Tony Rattey says the staff reductions will reduce EDS`s complement to around 1 000. "However, one must not read too much into what this means in EDS`s revenue terms as many of those people were involved in processing and the call centre, which are quite labour intensive."
Rattey says EDS specialises in long-term contracts and because of that it builds into them an easy way for customers to disengage themselves from the obligations.
"We understand that customers` strategies may change and then to hold them hostage to a contract that was signed eight years ago would not be fair. We understand that customers require that freedom no matter how galling the contract termination may seem to us," he says.
In March EDS delivered a call centre that was a fixed-deliverable project. The final value was not disclosed and the project had run since 1997.
EDS`s other banking clients include two second-tier banks, Mercantile and Lisbon Bank, as well as Gensec Bank, which is a wholly owned subsidiary of Sanlam.
Founded by one-time US presidential hopeful Ross Perrot, EDS has branches worldwide. It is planning an international restructuring that will see it reducing its total workforce of 140 000 by about 2 000.
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