El Segundo, California-based CSC will take a share of a contract estimated to be worth in excess of PLN 800m ($200m) where it will work alongside Warsaw, Poland-based services vendor Prokom Software SA to provide systems integration services under a framework agreement. PZU wants to consolidate the majority of its 400 customer service, sales and back-office systems.

Major Western IT services companies have been amassing significant operations in Eastern Europe during the late 1990s. They have been motivated in part by an expected increase in technology spending as countries including Poland, the Czech Republic, Hungary, Slovakia and Slovenia join the European Union, as well as the aim of using the region’s low-cost IT skills resources to provide low-cost IT and business services to Western clients.

EDS has some 580 employees based at its operation in Hungary, with a further 200 located in Poland and the Czech Republic. Accenture announced in October 2003 that it would increase the size of its workforce in the Czech Republic fivefold over the following five years 1,500, at its financial and accounting outsourcing center.

Local services providers also sensed a growth opportunity. In November 2002, Prokom CEO Ryszard Krauze highlighted Poland’s entry into the EU as a key driver for new contracts. The process of integration with the EU is extremely important for us, because member states will be required to develop comprehensive IT systems in order to elevate management standards as well as product and service quality, he said.

But has this growth materialized? Gartner claimed that IT services spending in eastern Europe grew 6.3% to $7.9bn in 2003, outstripping growth of 4.6% in western Europe during the same period. However, some believe the benefits of Poland’s entry into the European Union will take longer to come through than anticipated.

Paul Stodden, chief executive of Germany’s second largest IT services provider Siemens Business Services GmbH told ComputerWire: Demand for new IT services projects in new European countries has not been as strong as hyped. The problem has been that the administration processes for these companies to receive EU funding are very long, and many contracts remain in the discussion phase, as they have done for some time.

EU funding is vital to getting many IT services projects off the ground. The Hungarian Ministry of Informatics and Communications expects to invest a total of HUF 58.27bn ($263m) in various IT projects between 2004 and 2008, of which the EU will contribute HUF 25.41bn ($115m), representing 44% of the total budget.

This article is based on material originally published by ComputerWire