Dollar/Thrifty will outsource IT to EDS

DTAG (Dollar/Thrifty Automotive Group) has made the announcement to it's IT staff that it will be outsourcing to EDS. This has been in the works for many months now, but I guess is now official. If I get more specific information , I will post it.
One thinks that a good portion of the IT staff will get a position with EDS so the outsourcing can be as seamless as possible. However, a good portion of DTAG's IT staff has moved on, and it would seem that EDS's model is to move work to the cheapest location. The association with MphasiS in India would seem to indicate this:

EDS-India has 3,000 employees, and MphasiS has 11,000 (as well as another 1,000 outside India). Both companies have also made aggressive hiring plans for this year, and expect to field a total workforce of 20,000 by the end of 2006. By that time, EDS and MphasiS expect to have finalized the integration of their workforces.

The full article here: http://www.line56.com/articles/default.asp?ArticleID=7794
The point is, ultimately, this is high tech jobs leaving the city, and eventually off-shored.

Alot has been written about the pro's and con's about outsourcing. Especially trying to outsource the technical part of your business. An article about 'The Truth about Global Outsourcing' states:

At least 50 percent of outsourcing deals "fail" (don't return the results
promised to customers) and 80 percent don't produce any savings at all, according to the Gartner Group, an industry analyst.

And...

Too many outsourcing deals suffer "death by change order." Here's what happens: Outsourcing firms don't always do their homework up front in regard to understanding their clients' processes. Thus they underestimate the amount of work it will take to meet their promises. Often this is an honest mistake, but other times outsourcers may underquote on purpose, just to get the business. Then, then they get further into the contract, they say in essence: "Circumstances have changed and we're going to need more money." Naturally, customers aren't happy about it, but because they have so much invested in the outsourcer they have little choice but to pony up. When change orders occur several times over the course of the relationship, irreparable damage may occur. Companies lose profits, yes, but they also lose faith in their outsourcing firm . . . and what is supposed to be a fruitful partnership goes sour and possibly even comes to a bitter end.

The entire article is here: http://www.line56.com/articles/default.asp?ArticleID=7479&TopicID=11


The bottom line, here's how it plays on Wall Street: