Procter & Gamble Co. is backing away from an $8 billion deal that would have seen the consumer-products company outsource the management of its back-office functions to struggling EDS. P&G says it will instead divide the contract into smaller pieces and accept bids from multiple vendors, including EDS. The decision was based partly on an earnings warning issued by EDS in September. A spokesman for P&G says diversifying the contract will "minimize the risk" associated with using a single vendor in the volatile services market. The company will begin awarding the new contracts early next year.

The news could open the door for other big players in the services market, including IBM Global Services. In a recent research report, Merrill Lynch analyst Steve Milunovich said IBM is in better shape than EDS, noting that in recent months, its services unit has actually stepped away from deals that it viewed as not sufficiently profitable.