Multinational outsourcer EDS has retrenched 106 applications development staff from its Australian operation, however the company is vehemently denying the redundancies are payback for failed wage negotiations late last month.

The company revealed to staff last Friday that 66 positions in Sydney, 34 in Melbourne, four in Adelaide and one in Brisbane will be axed - an unusual juxtaposition given that it is having some difficulty filling full-time positions on major projects in Canberra.

Saying the "positions are to be separated from the company," an EDS spokesperson said the sackings are "absolutely not" comeuppance for a union-backed employee vote which threw out a company proposed deal called the People Agreement which froze wages in exchange for boosting some conditions.

"This has nothing to do with the People Agreement. It"s completely separated. These actions are a normal course of our business," the EDS spokesperson said, adding the retrenchments were required because of a fall-off in business in Australia.

Part of EDS" now open public acrimony with its employee is based on what it regards as an unwanted intrusion by employee advocate groups such as the Association of Professional Engineers, Scientists and Managers Australia (APESMA), getting involved in enterprise bargaining negotiations.

Discounting APESMA"s influence over its Australian workforce, the EDS spokesperson claimed numbers attending union meetings over the People Agreement had been inflated. She said the negotiations had been a learning opportunity for the company, with one tangible output being a greater transparency in communications between management and the workforce - as exhibited by the company coming clean about the lay-offs.

"People said they wanted more openness and this is a case in point," the spokesperson said.

However the company is having a harder time justifying the retrenchments in light of a widely acknowledged labor shortage in Canberra where EDS holds infrastructure deals with both the Australian Tax Office and Customs.

Asked why retrenched staff could not be relocated, if willing, to Canberra to save their jobs EDS said only that it is "examining all options," but denied that relocated staff will be forced to resign and then reapply for new jobs.

EDS boss pitches offshore savings to bankers

It will be less than comforting for EDS employees to learn that 106 of their number were being given notice, at a time when the company"s Australian managing director Chris Mitchell is hard-selling the cost cutting virtues of offshore development to the banking community.

Speaking at a banking technology conference in Sydney last week, Mitchell said EDS could now deliver its services from a range of locations to remain price competitive.

The line is hardly coincidence with EDS" flagship Australian 10 year A$5 billion (US$3.84 billion) contract with the Commonwealth Bank drawing to a close in 2007. Several reports have tipped Indian services company Infosys as being selected to imminently takeover maintenance and development of the banks notorious PeopleSoft human resources and general ledger application - reports which the bank is yet to confirm or deny.