While a well-placed source has confirmed T-Systems has not been short-listed for the renewal of the Eskom outsourcing deal, the outsourcing giant would say little more than that the deal is at a "sensitive stage".
T-Systems MD Gert Schoonbee says he is unable to comment on specific contractual details, but described the Eskom deal as one of the most challenging contracts with which to achieve stability in terms of cost and service delivery.
"They have approached us to review certain aspects of the deal, and how they see ICT outsourcing in the future. This will certainly impact us, but I can't say more at this stage."
However, according to industry sources, the Eskom contract is currently up for renewal - expiring on 31 December - and T-Systems is not among the bidders that have been short-listed to provide ICT outsourcing services to the power utility.
T-Systems bagged the five-year Eskom contract - rumoured to be worth about R500 million a year - when it took over state-owned ICT services provider arivia.kom at the beginning of 2010.
It is understood Eskom issued a request for proposals earlier this year for the contract's renewal, attracting bids from big players such as Dimension Data, EOH, and Business Connexion. It is believed T-Systems was informed on 31 October that it had not made the short-list.
T-Systems initially beat four rival bidders to secure arivia.kom, after interest was shown by Dimension Data, IBM, Siemens and Accenture, securing not only the Eskom contract, but also a long-term Transnet deal that was rumoured to be worth about R200 million a year.
Schoonbee says T-Systems currently has six customers that make up 80% of its revenue. "On the one hand, this is good, but it's also a big risk. From a contractual perspective, we cannot rely on contractual protection to see out the term of a contract. There are service level agreements that give companies the power to terminate contracts. We have to rely on customer loyalty - that is very important to us."
He adds customers are increasingly shying away from long-term contracts and being locked into these. Meanwhile, non-traditional players, such as those offering cloud services - including Google and Amazon - are eating into traditional outsourcers' market share, with large corporations looking to cloud services to cut costs, says Schoonbee.
"You could call this a double whammy for us. This all means that we've had to reinvent ourselves and further commoditise our services."
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