EDS in drive to cash in on China IT services
REUTERS
THURSDAY, MAY 26, 2005
HONG KONG: Electronic Data Systems Corp, the world's No. 2 technology services company, is scouring China for local partners to cash in on an anticipated boom in the country's IT services market.
The company is hoping to boost its headcount in China -- currently at about 300 employees -- by a third this year, as it builds out data centres and establishes service offerings in the country.
"We are driving it hard and fast, and having a local partner is an imperative," Chong M. Ng, the company's managing director for Greater China and Korea, told Reuters in an interview.
"Time is of the essence to make our mark in China."
EDS, whose biggest competitor is IBM, brings together software firms, such as Microsoft Corp., and equipment makers, such as Dell Inc., to collaborate on client projects.
In China, it is looking to sign up domestic hardware and software firms as partners as it serves clients, which have included Beijing Capital International Airport Co. Ltd. and Bank of China.
Chong said EDS was looking for joint venture partners or equity stakes in local players.
"We hope to have a $1 billion business in China in 5 to 10 years," Chong said, adding that there are currently 10 China deals in the pipeline, and that he hopes to close 2 or 3 of them by the end of this year.
EDS's had revenues of $20.6 billion in 2004.
Globally, Texas-based EDS has been cutting staff to cope with money-losing contracts, credit-rating downgrades and market share erosion, while IBM and other competitors, such as Computer Sciences Corp., have seen new business growth.
"Most of the challenges are now behind us," said Robb Rasmussen, vice president of EDS Global Alliances.
China's IT services market was worth $4.3 billion last year and is expected to grow at nearly 16 percent a year on a compounded basis through 2009, according to research firm IDC, which said EDS's partnership approach would allow it to benefit from economies of scale.
"Given the size and the complexity of the (China) market, it's very difficult for companies to do it all directly," said Kit Yau, senior research manager at IDC.
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