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December 17, 2006

Unisys in hunt for two BPO mega-deals

Infrastructure services vendor Unisys Corp is in the running for two major outsourcing contracts each worth more than $500m to provide mortgage processing services.

By CBR Staff Writer

Nick Wilson, the former head of IBM Global Services’ UK business, who joined Unisys to head up its UK division earlier this year, told Computer Business Review that the vendor was performing due diligence on the deals, and if things go to plan, hoped to secure then in the second quarter of next year.

Although he would not name the clients that Unisys was in talks with, he said: These will be industry-changing deals if we land them. Nobody is doing anything on this scale at the moment.

There have only been a handful of mortgage processing outsourcing deals signed in the UK to date, the largest of which is EDS Corp’s $390m deal with Abbey National. The two companies announced a ten-year deal in March 2001 through which they set up a joint venture vehicle to support Abbey National’s two million accounts and target work with other lenders, although they have struggled to win significant external business.

Wilson said that Unisys is looking to build on its existing platform of business process outsourcing deals in the UK financial services sector, where it currently processes some 70% of all checks through its IPSL venture, and 20% of life insurance claims through the UISL vehicle. Both contracts have been a drain on Unisys’ bottom line in the past, but Wilson said that, following renegotiation last year, they are now delivering a profit.

The company needs to recover some momentum in its BPO business after losing out to India’s Tata Consultancy Services on a major life insurance and pensions processing deal worth $900m with Pearl Assurance. Wilson said; We want to be the number one BPO provider in the UK payments, life insurance and mortgage processing market.

Unisys has made some high profile changes this year in order to arrest its long-term financial underperformance.

The company has also narrowed the focus of its IT services business to just 500 key clients worldwide across three major vertical markets: financial services; public sector; and commercial. It jettisoned its media sector unit last month by selling it to Atex Group for an undisclosed sum. Wilson claimed that the company’s win rate when pitching for business with its 500 main accounts is more than 50%.

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The company has also slimmed down its number of alliance partners to nine, including Dell and Microsoft. Unisys handles 40% of Dell’s break/fix services worldwide, where it competes against the hardware vendor’s other main principal services partner, Getronics, and it has just launched a new set of services to help clients roll out Microsoft’s new Vista platform.

Wilson said: We have positioned ourselves as a non-confrontational partner and it suits us well. Clients are increasingly looking to work with a number of best-of-breed partners, and no single vendor can deliver absolutely everything. We are working alongside Capgemini at the Metropolitan Police, and we will look to work in consortium for any potential business with the ID cards scheme.

Unisys already makes in excess of $1bn in revenue in the UK, and Wilson is aiming to expand the company so that it is among the top three of the tier two suppliers, by the end of 2008. He ranks IBM Global Services and EDS as tier one players, and considers Fujitsu Services and Atos Origin to be his closest peers in the second tier in the UK services sector.

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