EDS lands some elephants

It seems like an inevitable trend – that is, large companies finding ways to cut costs by offloading non-core functions. And one of the leading outsourcers is EDS (NYSE: EDS).

However, the space is highly competitive – and unpredictable. For example, EDS had to deal with the termination of a major customer, Verizon (NYSE: VZ).

But, as seen with the latest Q1 report, EDS is getting traction. Profits came to $62 million, or 12 cents per share as revenues increased from $5.22 billion to $5.37 billion. There was also a 66% increase in signed contracts to $5.6 billion.

After all, EDS was able to snag mega contracts with Royal Dutch Shell and the Infocomm Development Authority of Singapore. In fact, there were 12 contracts in excess of $100 million.

EDS is also getting some growth with its integration services for SAP (NYSE: SAP) applications. Actually, the company is going to do the same with Oracle (NASDAQ: ORCL) software. Oh, and EDS is a key partner for Microsoft's (NASDAQ: MSFT) CRM offering.

Interestingly enough, the slowing US economy is actually helping. That is, companies – as well as governments -- need to find a way to cut costs. So, why not go offshore?

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.