Capgemini Wins $3.5bn TXU Outsourcing Deal.(TXU Corp.)

Capgemini SA has signed the biggest IT services contract of 2004 so far: a 10-year $3.5bn outsourcing deal with Dallas, Texas-based TXU Corp to provide a range of business process outsourcing and IT support services.

The contract is a significant boost for Paris, France-based Capgemini's ambitions in the US, and will give it a foothold in the one of the country's biggest energy companies, enabling it to compete more successfully with Accenture for energy outsourcing deals.

The markets reacted positively to the news of the contract, with the price of Capgemini's shares shooting up almost 6% to a high of 29.47 euros ($35.29) in Tuesday trading on the Euronext Paris exchange, up from a close of 27.81 the previous day.

Colette Lewiner, Capgemini's global head of energy, utilities and chemicals industries, told ComputerWire that as a major IT supplier to TXU, the company had been in talks with the client for the past four years regarding the outsourcing deal. Nevertheless, the contract was awarded in a closed competitive bid against bids from SAIC and Accenture.

The deal resembles Capgemini's outsourcing relationship with Canadian utility giant Hydro One, whereby the two companies set up a joint venture operation managed by the IT services provider. TXU and Capgemini have jointly set up Capgemini Energy, in which TXU has less than a 3% stake. The company will be staffed by 2,700 of TXU's employees who will move over on July 1, 2004.