kraft Foods Inc. a global leader in branded food and beverages, today announced a seven-year, $1.7 billion agreement to receive information technology services from Electronic Data Systems (EDS), a leading provider of IT services. The agreement, which includes data centers, hosting, telecommunications and workplace support services, begins on June 1, 2006.

"World-class information technology is critical to Kraft's long-term business success. Our strategy is to have the ideal mix of in-house and outsourced activities. So we are very pleased that EDS, a leading provider of IT services, will now be a key part of our team," said Roger Deromedi, Kraft Foods CEO.

Approximately 670 employees, who provide certain IT support to Kraft, are expected to transition to EDS as a result of the agreement. The Company will recognize asset impairment and implementation costs related to the transition. Such costs will be expensed as part of the Company's previously announced restructuring program.

"In outsourcing our infrastructure services to EDS, we take advantage of their scale and exceptional capabilities to help us focus our internal resources on our core business activities," said Alene Korby, Kraft Foods Executive Vice President and CIO.Although outsourcing continues to grow year over year, there's been a trend away from megadeals of this size. Gartner Inc. said this week that in 2005, there were only 11 outsourcing deals in excess of $1 billion. In 2004, there were 12 such deals, and in 2003, a total of 16.

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Prashanth Rai