Sears Exits $1.6 Billion Outsourcing Deal With CSC

Filed in archive Outsourcing News on May 17, 2005

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

Sears said it ended the contract "due to CSC's failure to perform certain of its obligations in Accordance with the terms of the agreement."

Sears and CSC signed the outsourcing agreement in June 2004. Under the contract, CSC was to provide a range of IT services, including support for desktops, servers, and telecommunications systems.

William Bierce, an outsourcing contract attorney, said Sears' early withdrawal from the agreement suggests that "the transition has failed."

In addition, internal politics at Sears may have caused the termination of the deal as the author of the outsourcing contract, Gerald Kelly, was replaced in a merger with Kmart. Related to this, Kmart chairman Edward Lampert wanted to cut costs at Sears and Kmart and according to analyst Michael Guilbault, "a 1.6 billion outsourcing deal may have looked like an easy target."