Fears of Price Hike For IT Contracts After EDS Ruling
There are fears that the massive damages awarded against EDS following its failed CRM project with BSkyB could push up the price of IT services contracts
“A large part of this case fell down to an individual within EDS, who was making overly ambitious costs and delivery projections,” said Mayes. “What this case will mean is that outsourcing suppliers will take a more rigorous process, as no one wants to be staring down the barrel of a £200 million claim. But it will also make some clients considering a project take a step back and ask, are we absolutely sure we want to do this and we are doing it in the right manner?
“The sheer amount of compensation will certainly send a few shivers through the headquarters of large IT services players,” admitted Mayes. However he feels that it will only make these IT services players more determined to have complete confidence in their project planning processes.
And Mayes warned that some companies that have entered into recent cost-saving contracts could be caught out when the economy recovers.
“In the last 18 months, we seen a lot of people entering into outsourcing deals with a short-term cost cutting focus,” said Mayes. “These companies may find the actual contract they have signed up to, may not be flexible to take into account the recovery in the economic environment. This really highlights the benefits doing your homework before entering into deals with outsourcing suppliers.”
