EDS inks $4.5 billion deal with BofA

Bank of America will outsource the management of its voice and data networks to IT services provider Electronic Data Systems.

Ed Frauenheim Former Staff Writer, News
Ed Frauenheim covers employment trends, specializing in outsourcing, training and pay issues.
Ed Frauenheim
2 min read
Electronic Data Systems said Thursday it signed a $4.5 billion deal to revamp and manage Bank of America's voice and data networks.

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Besides running Bank of America's networks, EDS will provide support for the bank's help desk operations. As a result of the 10-year outsourcing deal, about 1,000 Bank of America employees across the United States will transition to EDS. Unlike in some other IT services deals, EDS will not buy Bank of America's existing technology systems, an EDS representative said.

The deal is good news for a company that has struggled of late. EDS announced Monday that its fourth-quarter earnings will fall by 5 cents per share because of aircraft lease deals with United Airlines, whose parent company, UAL, has filed for bankruptcy.

EDS stock also fell this fall after the company offered third-quarter earnings guidance well below expectations, including write-downs associated with the US Airways and WorldCom bankruptcies. In October, EDS said it was the subject of an SEC probe.

But the deal with Bank of America does follow other positive announcements from EDS. The company said Wednesday it is in final contract negotiations with the Bank of Bermuda for a $375 million, 12-year deal related to banking systems and IT services. On Tuesday, EDS announced it had inked contracts worth $240 million with two existing clients, timber company Weyerhaeuser and Australian power utility Integral Energy.

EDS is one of the largest IT services companies in the world, with revenue last year of $21.5 billion.