Israeli telecoms-equipment maker ECI Telecom (Nasdaq:ECIL) said today it has signed a five-year contract to receive outsourcing services from the Electronic Data Systems Corp (NYSE, LSE:EDS) Israeli unit at a cost of $80 million.
EDS Israel will handle all the activities of ECI-IT, an independent internal unit that until now handled all ECI's information systems.
ECI-IT maintains a workforce of 190 people, of whom only 60 work directly for the company. The rest are temps and subcontractors.
ECI Telecom's chief operating officer Eitan Tzur stated that the move would lead to "substantial savings in ECI Telecom's costs", and follows other efficiency steps the company has implemented in the past year.
.EDS Israel said this was one of the largest outsourcing contracts signed in Israel in the last few years
Earlier this year the press reported that ECI was trying to sell the ECI-IT unit. Contenders for its charms included EDS, founded by Texan billionaire Ross Perot, and IBM Corporation (NYSE:IBM), as well as the Israeli group Formula Systems (Nasdaq:FORTY).
At the time ECI's plan called to demerge into its five constituent key units ¿ Lightscape, Inovia, Enavis, Innowave and NGTS, and to act as a holding, management and production company for the spinoffs.
It did not consider ECI-IT, a small non-core unit generating a few million dollars income a year, worth holding onto, and therefore decided to sell the division and outsource its IT needs.