The Xerox Corp facilities management contract awarded to Electronic Data Systems Corp is now being put at $3,000m over 10 years rather than $4,000m: the General Motors Corp subsidiary will take on 2,000 of the 2,700 people Xerox employs in the sector, and will pay $100m for the equipment; the deal covers data centre operations in the US, the UK and Brazil; worldwide voice and data telecommunications; desktop systems support; and designated business-support applications; not included are information management functions that focus on strategy, architecture or new application development for business process re-engineering; according to the Wall Street Journal, losing bidder IBM Corp is thought to have failed when it asked for further concessions on price, and analysts told the paper that they questioned whether IBM could afford to compete successfully on such contracts – they suggest that top brass, including Louis Gerstner, had underbid on other computer services contracts and was prarticularly sensitive about a repeat performance; IBM achieved a gross margin of only 11% last year at its Integrated Systems Solutions Co unit, where Electronic Data Systems enjoys margins of 24%.
