CSC Enhances Cloud Computing Offerings

Jun.16.10 | About: Computer Sciences (CSC)

Leading information technology (IT) and business process outsourcing (BPO) company Computer Sciences Corporation (NYSE:CSC) is taking aggressive measures to enhance its cloud computing services. The company recently introduced CloudLab, a new development and test service mechanism, operational on the cloud computing platform.

This technology is expected to provide on-demand access to the end customer within a secure networking environment, which is expected to speed up the workflow process while maximizing productivity, without incurring additional capital expenses and development costs.

As per a report published by Market Research Media, the U.S. government has laid out broad plans for the implementation of cloud computing in the federal government's infrastructure. The research firm has forecasted that U.S. Government spending on cloud computing will grow at around a 40% CAGR over the next six years, whereby the expenditure is expected to surpass $7.0 billion by 2015. As CSC has a large portfolio of government customers, we believe the CloudLab technology offered by the company will find many takers.

CSC is one of the oldest players in the cloud computing segment. Apart from the newly launched CloudLab, CSC offers Trusted cloud service, which needs special mention. These are services that allow companies to avoid the headaches and pitfalls of software licensing, installation and upgrades by moving programs to the cloud.

In the Trusted Cloud, concerns about up-to-date operating systems or desktop processing power required for particular software programs disappear. These broad-range services offered by the company help it cater to customers belonging to different industries, thereby helping to increase the customer base and lend stability to the business model.

Cloud computing is the buzzword among the big information technology players, as the entire enterprise segment is going through a transformation based on changing customer demand. So this powerful technology provides a big business opportunity to established IT players, but requires service providers to adapt to the change. Small and big companies like Microsoft (NASDAQ:MSFT), Oracle (NYSE:ORCL), International Business Machines (NYSE:IBM), Hewlett-Packard Company (NYSE:HPQ), Google (NASDAQ:GOOG) and (NYSE:CRM) are focused on the segment, although the success of some of the new smaller players is doubtful, given the stiff competition from the larger players.

CSC is constantly growing through acquisitions that enhance its services portfolio and expand its operations in new markets. It has a steady flow of new business, especially in the government vertical and is financially sound. On the other hand, the tough competition that the company faces in the IT and cloud computing space, is expected to rationalize the growth prospects to some extent.

We maintain a Neutral rating on CSC.