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BPO Journal

Sunday, May 22, 2005

Another bites the dust

Information Week reports Sears Holding Corp., subsidiary of Sears, Roebuck and Co., terminated its 10-year, $1.6 billion IT outsourcing deal with Computer Sciences Corp. (CSC) less than a year into the agreement. CSC was contracted to support Sears' desktop computers, servers, and voice and data networks. It also supported systems that ran the retailer's Web sites and its decision-support systems. In a SEC filing, Sears said it ended the engagement "for cause, due to CSC's failure to perform certain of its obligations in accordance with the terms of the agreement."

William Bierce, a New York City-based attorney who specializes in outsourcing contract law, speculates that Sears is backing away from the agreement in its early stages because "the transition has failed". Others, however, believe internal politics at Sears may be a bigger factor.

The company's outsourcing contract with CSC was authored by former CIO Gerald Kelly. Kelly, however, was ousted earlier this year following the merger of Sears and Kmart. Kmart CIO Karen Austin was given the top technology post at the combined company.

Concurrently, Kmart chairman Edward Lampert wants to cut administrative costs at Sears and Kmart. Michael Guilbault, Technology Business Research analyst, remarked, "A $1.6 billion outsourcing deal may have looked like an easy target."

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