In an effort to put itself into the lucrative e-commerce game and reverse its flagging fortunes, EDS has created a central electronic-business services unit. The outsourcer has already been offering electronic-business services through its divisions. But the new unit makes those services more focused and re-branded.
Analysts applauded EDS for formulating an e-commerce strategy, but they also chided the services giant for being late to a market where IBM and Andersen Consulting have established themselves as leaders.
"When you think of EDS, you think of someone who manages mundane technical operations," said Matthew Nordan, an analyst at Forrester Research.
"EDS should have made this move a year ago," he added.
Nevertheless, there are significant revenue opportunities for EDS and others in an elec- tronic-business space where there are 20 per cent profit margins, said Moshe Katri, an analyst at SG Cowen.
Called E-Business Solutions, the new unit was first disclosed during a securities analysts meeting earlier this month when EDS announced plans to cut 5200 jobs after posting a loss of $US20.6 million for the first quarter. The organisation said restructuring costs made up part of the loss.
The new group combines EDS businesses such as Centrobe, Electronic Business and CIO Services, which total $US2 billion in revenue and 20,000 employees - or roughly half the staff IBM has, Nordan said.
EDS "needs to keep morale up" during the downsizing, "but if they can get employees excited about the new [electronic-business] focus, that will help", said Cynthia Murphy, an IDC analyst.