US-based global IT services group Computer Sciences (CSC) plans to use its outsourcing deal with Old Mutual, announced at the weekend, as a platform for growth into SA.
Old Mutual and CSC have signed a seven-year agreement in terms of which CSC has acquired and will manage Old Mutual`s South African IT infrastructure.
The deal is worth R2.1 billion over the full seven years.
An Old Mutual spokesman says the group considered South African companies for the deal, but CSC best met its criteria: flexibility and international capability.
He says there are several options open at the end of the seven years: the contract can be extended; the group could revisit the agreement and requirements, and enter an alliance with another company; and it could bring the operations in-house again, although he stresses that this is unlikely.
About 430 staff employed by or contracted to Old Mutual in SA will join CSC, whose South African office is based in Cape Town.
Juliet Kimlin, marketing business manager for CSC`s Europe, Middle East and Africa operations, says although CSC has operated in SA previously, this is its first large-scale entry into the country in terms of value and size.
The company has a joint venture with life assurance company Hollard and also works with First National Bank, Absa and Nedcor. Kimlin says these deals involve mostly systems integration and product services.
CSC has also appointed Martin Vergunst as the MD of its African region. Vergunst, a chartered accountant who joined the group when it acquired financial services software company Continuum, was previously financial director at the group`s financial services division in Europe.
Kimlin says the Old Mutual deal is strategic for CSC as it now has the capability which will provide a platform from which it can grow in SA.
The group is also bidding as part of a consortium for SA`s third cellular network licence. "There are a lot of opportunities we are pursuing," she says. "SA is an expanding market with large IT requirements and we are aggressively pursuing opportunities here."
She adds that the agreement will not affect existing alliances between Old Mutual and other IT organisations such as OmniLink and Uskotec. "It`s what we call selective outsourcing," Kimlin explains. "So we will have to work together with the suppliers."
Vic Lumby, Old Mutual`s chief information officer, says the alliance will give Old Mutual access to CSC`s international practices, procedures and skills.
CSC president and CEO Van Honeycutt says his company`s goal is to support Old Mutual`s growth plans by creating a more efficient, streamlined infrastructure.
In its fiscal year to April 1999, CSC reported revenue of about $7.7 billion, compared with the previous year`s figure of $6.6 billion.
The Old Mutual spokesman says the agreement is effective only in SA, but it does provide for CSC to extend its services to Old Mutual`s international operations if required.
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