In what could be an important decision for the IT outsourcing industry and its customers, a London court recently ruled that EDS (now part of Hewlett-Packard) must pay damages to a former outsourcing customer for failing to live up to its sales pitch.
British Sky Broadcasting, or BskyB, had signed an outsourcing contract with EDS to build a customer service system in 2000, but terminated the deal early in 2002 after what it said was "woeful" performance by the IT service provider. BSkyB alleged deceit, negligent misrepresentation and breach of contract by EDS.
Although the total costs and damages will be determined at a later date, BskyB said it expects EDS will be liable to pay more than four times the amount of the original contract.
It's rare that an outsourcing dispute makes it to court, let alone to a final decision. And given the result, many outsourcing experts expect this could have implications not just in the U.K. but industry-wide.
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