"OUTSOURCING" A GROWTH INDUSTRY  

Municipalities first farmed out garbage collection because of vulnerability to hostile unions. Now companies are contracting-out other services, including travel, legal, cafeteria operations, building services and vehicle fleet maintenance. Today the swing is just starting in sub-contracting data processing and systems integration services. "Outsourcing", as it is now known, is going to be the "tidal wave of the 1990s", according to Merrill-Lynch Global Securities Research & Economic Group in New York (As this column was being created the Toronto Star announced it was contracting out the delivery of all its newspapers by a private company. Initial saving: $3 million. They do not have to build a maintenance shop for their new suburban plant. They will also sell 22 tractor-trailers and 55 trucks previously required for such deliveries). If you find it cheaper to buy electricity than to generate your own, you'll find similar advantages with outsourcing data processing. This is far more than the time-sharing computer practices of the 1960s and 1970s. Now everything can be bundled.

This allows companies to cut costs, stop worrying about fast changing computer technology, unload heavy investment of in-house, often outdated computer systems, reduce staff, free up expensive floor space and concentrate on their business rather than computer operation. Outsourcing is the fastest growing trend in today's business computer marketplace.

Outsourcers are saying they will not only save company money, but also promise to improve company business performance!

When you build a car and sell it, the profit is only made once. But if the buyer turns the vehicle into a taxi and becomes a taxi operator, then as his business grows, with fleet purchasing discounts costs drop, and there is continuing profit in every fare for years.

The same might be said of computers. People operating mainframe computers are taking the same path. With stiff competition in the global computer manufacturing market, anyone buying and operating 100 mainframes can strike a very attractive deal. Now such companies are doing more than operating computers - they are managing complexity.

The company leading by light-years in this field is EDS (formerly Electronic Data Systems).

EDS, and other smaller companies in this field, offers clients state-of-the-art computers without the hassle of having to find, operate, maintain or replace them. Just keeping up with developments in this field can keep a roomful of people busy. Some 7,000 clients let EDS handle it. It's not a headache to them, just another burp. They control more than 100 mainframes, have 70,000 employees, operate supernodes in 28 countries, manage and operate the world's largest private, fully computerized information processing system, doing $7 billion annual turnover. Is it big? The EDS control room has the capability of instructing their computers to balance 5.4 billion checking accounts (that's one account for everyone on the planet) in ONE SECOND! Can you imagine the implications of this operation? No one company can possibly have such efficiency in their own operation. With such huge volume, no one can compete with EDS costs. They can do in a tiny area what some companies now dedicate whole floors of equipment and staff to accomplish.

Think of the reduction in basic costs when you no longer have to rent expensive downtown office space, at $30 to $50 a square foot, to hold mainframe computers and the staff that goes with them. EDS is partially operating from new quarters being erected in Plano, Texas, far outside the downtown rates of Dallas, New York, Toronto, London or Tokyo. With the largest private digital/fibre-optic/satellite communications network in the world EDS can handle your requirements as fast as if they were in the next room. They are also far safer than a small operation subject to security leaks. For many modern companies, it doesn't matter where the office is as long as computer processing is done in cyberspace.

EDS doesn't just handle accounting for 6,000 banks and credit unions, they transported 225,000 school children from throughout Canada and the U.S. to the bottom of the Mediterranean to view a 2,000-year-old shipwreck through the Jason Project. They increase productivity and cut costs as within Caterpillar Inc.'s "Plant With A Future" in Aurora, Illinois where EDS integrates plant floor automation and materials management system to streamline the flow of materials to assembly areas. They are big in oil, gas, chemicals, utilities, mining, aerospace, defense and pharmaceuticals. They are just setting up a satellite system to handle all the data integration services for 10,000 General Motors dealers. EDS is also the systems integrator and facilities manager for the Smithsonian's new permanent "Information Age" exhibition in Washington, D.C.

That's not all. In this globalizing world working with EDS provides a "connection" to almost anywhere. Today, it isn't who you know, it's where your connections are. More information: EDS, World Headquarters, 7171 Forest Lane, Dallas, Texas 75230. Phone: 214/604-6000.

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