Kraft, EDS sign $1.7B IT services deal

28.04.2006
Kraft Foods Inc. is outsourcing its IT infrastructure -- including data centers, desktop and telecom support -- to Electronic Data Systems Corp. (EDS) in a seven-year agreement that's valued at US$1.7 billion.

Approximately 670 Kraft employees will go to work for the Plano, Texas-based EDS, which announced the agreement Friday.

Mike Klause, global leader for EDS consumer industries and outsourcing, said the company will be responsible for all of Kraft's IT infrastructure except for applications development. Klause said Kraft also wants EDS to help it innovate.

The transition to EDS is expected to take place in June, he said.

Kraft has been running its own IT operations, but it's also part of the Altria Group Inc. While it's been widely reported that Altria is considering spinning Kraft Foods off, a Kraft spokeswoman said the decision to outsource was not done for any reason other than to improve business operations.

'We are taking these actions because we want to be stronger for the long term, and we would do these things regardless [of] whether Altria or somebody else owns our shares,' said Annica Johansson, a spokeswoman for Kraft.