Sears Exits $1.6 Billion Outsourcing Deal With CSC - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

IoT
IoT
Business & Finance

Sears Exits $1.6 Billion Outsourcing Deal With CSC

In an SEC filing, Sears says CSC failed to perform as required under the 10-year contract.

Sears Holding Corp. subsidiary Sears, Roebuck and Co. has terminated its 10-year, $1.6 billion IT outsourcing deal with Computer Sciences Corp. less than a year into the agreement.

In a Securities and Exchange Commission filing, Sears said it ended the engagement "for cause, due to CSC's failure to perform certain of its obligations in accordance with the terms of the agreement." A CSC spokesman declined to comment. Sears' officials didn't immediately return calls.

Sears' SEC filing, dated May 13, also revealed that CSC sought a federal court injunction that would have prevented Sears from ending the contract. The court denied the request.

Sears and CSC struck the deal in June 2004. CSC was to provide the retailer with a range of IT services, including support for desktops, servers, and telecommunications systems.

Cindy Shaw, an analyst at securities broker-dealer Moors & Cabot, says Sears' decision won't likely have a major financial impact on CSC but notes that "it could hurt from a PR perspective."

With both sides not talking, speculation is rife over what's behind the deal's failure. The fact that Sears is backing away from the agreement in its early stages may suggest that "the transition has failed," says William Bierce, a New York City-based attorney who specializes in outsourcing contract law.

Others, however, believe internal politics at Sears may be a bigger factor. The company's outsourcing contract with CSC was authored by former CIO Gerald Kelly. Kelly, however, was ousted earlier this year following the merger of Sears and Kmart. Kmart CIO Karen Austin was given the top technology post at the combined company.

At the same time, Kmart chairman Edward Lampert wants to cut administrative costs at Sears and Kmart. Says Michael Guilbault, Technology Business Research analyst, "A $1.6 billion outsourcing deal may have looked like an easy target."

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
State of the Cloud
State of the Cloud
Cloud has drastically changed how IT organizations consume and deploy services in the digital age. This research report will delve into public, private and hybrid cloud adoption trends, with a special focus on infrastructure as a service and its role in the enterprise. Find out the challenges organizations are experiencing, and the technologies and strategies they are using to manage and mitigate those challenges today.
Slideshows
IT Careers: Top 10 US Cities for Tech Jobs
Cynthia Harvey, Freelance Journalist, InformationWeek,  1/14/2020
Commentary
Predictions for Cloud Computing in 2020
James Kobielus, Research Director, Futurum,  1/9/2020
News
What's Next: AI and Data Trends for 2020 and Beyond
Jessica Davis, Senior Editor, Enterprise Apps,  12/30/2019
Register for InformationWeek Newsletters
Video
Current Issue
The Cloud Gets Ready for the 20's
This IT Trend Report explores how cloud computing is being shaped for the next phase in its maturation. It will help enterprise IT decision makers and business leaders understand some of the key trends reflected emerging cloud concepts and technologies, and in enterprise cloud usage patterns. Get it today!
White Papers
Slideshows
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Sponsored Video
Flash Poll