Perot Systems
Perot Systems Corporation was a multinational information technology services provider founded on June 1, 1988, by American businessman H. Ross Perot and eight former executives from Electronic Data Systems (EDS), including Morton H. Meyerson, and headquartered in Plano, Texas.[1][2] The company specialized in IT consulting, systems integration, software development, and managed services, serving key industries such as healthcare, government, financial services, manufacturing, energy, and travel, with notable clients including the U.S. military and Department of Homeland Security.[2][3][4] From its inception, Perot Systems focused on delivering customized technology solutions, including network management, electronic commerce, deregulation strategies, and healthcare outsourcing, building on Perot's prior success in pioneering the IT services industry through EDS, which he founded in 1962 and sold to General Motors in 1984.[2][5] Early growth was constrained by a non-compete agreement with GM, leading the team to work without pay for 18 months until securing its first client, an insurance company, in 1989.[1][6] By 1991, the firm had expanded to 125 employees across the United States, Ireland, and the United Kingdom, and it continued to scale through strategic acquisitions, such as the Custom Development Division of Platinum Software in 1994 and multiple firms in 1997, including Nets Inc. for $9 million, Benton International, Icarus Consulting AG, Syllogic B.V., and Stamos Associates Inc.[1][2] Ross Perot stepped down as CEO in 1992 to pursue his U.S. presidential campaign, with Meyerson assuming leadership until James Cannavino became president in 1995 and CEO in 1996.[1] The company went public on the New York Stock Exchange (ticker: PER) on February 1, 1999, raising capital amid rapid revenue growth from $600 million in 1996 to $993.6 million in 1998, with net income surging 261% to $40.5 million that year and a workforce of 6,000 employees.[1][2] By 2000, annual sales exceeded $1 billion, bolstered by further acquisitions like Health Systems Design Corp., and the firm maintained a focus on high-value IT solutions amid the dot-com era.[1] In September 2009, Dell Inc. acquired Perot Systems for $3.9 billion in cash, marking Dell's largest acquisition at the time and integrating over 23,000 employees and more than 1,000 clients to expand its global IT services portfolio.[7][8] The unit operated as Dell Services until 2016, when Dell sold it to Japan's NTT Data Corporation for $3.05 billion, after which it became part of NTT Data Services, continuing to provide IT solutions worldwide.[9][10]History
Founding
Perot Systems Corporation was founded on June 1, 1988, by billionaire entrepreneur H. Ross Perot in the Dallas area of Texas, immediately after the expiration of a non-compete clause in his 1986 severance agreement with General Motors, the parent company of Electronic Data Systems (EDS), which Perot had established in 1962.[6][11] The new venture emerged from Perot's desire to re-enter the information technology services industry, drawing on his prior success with EDS, which he sold to General Motors for $2.4 billion in 1984 before departing amid strategic disagreements two years later.[12][13] The company was established over a breakfast meeting with eight former EDS executives, whom Perot recruited as key associates, including his son Ross Perot Jr., to form the initial leadership team.[6][14] Headquartered initially in Plano, Texas, Perot Systems was positioned as a technology services firm specializing in IT consulting, systems integration, and business solutions, targeting industries such as healthcare, manufacturing, and government from the outset.[13][15] This founding marked Perot's return to the sector where he had built his fortune, emphasizing high-quality, client-focused services without the bureaucratic constraints he experienced at EDS under General Motors ownership.[12] In its early days, Perot Systems operated with a lean structure, securing its first major client—an insurance company—in 1989, which validated its model of delivering customized technology solutions.[6] The venture quickly faced legal challenges from EDS, which alleged violations of Perot's non-compete terms in pursuing government contracts, leading to court battles that highlighted the competitive tensions in the industry but ultimately affirmed Perot Systems' independent operations.[11][12]Growth and Expansion
Following its founding in 1988, Perot Systems experienced rapid initial growth, securing key contracts such as one with the U.S. Postal Service and expanding its workforce and revenue base despite early legal challenges from a non-compete agreement with General Motors stemming from the prior sale of Electronic Data Systems (EDS). By 1996, the company had achieved $600 million in annual revenue, reflecting strong demand for its information technology services in industries like healthcare and finance.[16] The late 1990s marked a period of accelerated expansion through strategic acquisitions and organic growth. In 1994, Perot Systems acquired the Custom Development Division of Platinum Software to bolster its software capabilities. Revenue climbed to $781.6 million in 1997, with net income of $11.2 million, supported by further acquisitions including Benton International, a 70% stake in Icarus Consulting AG, Syllogic B.V., Nets Inc., and Stamos Associates Inc., which enhanced its European and Asian presence. By 1998, revenue reached $993.6 million—a 27% increase from the prior year—net income surged 261% to $40.5 million, and the employee count grew to 6,000, with new offices established in countries such as the Netherlands, India, and Argentina.[16] Entering the 2000s, Perot Systems continued its trajectory with revenues exceeding $1 billion in 2000 and approximately 7,500 employees, driven by the acquisition of Health Systems Design Corp., which provided access to the Diamond software suite for healthcare clients. The company further expanded in 2002 by acquiring ADI Technology Corp., strengthening its government sector offerings. Revenue grew steadily thereafter: $1.5 billion in 2003 with 15,000 employees, $1.8 billion in 2004, $2 billion in 2005 with 21,000 employees, and $2.3 billion in 2006. By 2009, ahead of its acquisition by Dell, Perot Systems reported $2.78 billion in annual revenue, employed over 23,000 people, and operated offices in more than 25 countries, establishing itself as a global IT services leader focused on infrastructure management, applications development, and consulting.[1][17][18][19]Public Offering
Perot Systems Corporation conducted its initial public offering (IPO) on February 1, 1999, marking a significant milestone in the company's transition from private ownership to public trading on the New York Stock Exchange under the ticker symbol PER.[6] The IPO involved the sale of 6.5 million shares at an offering price of $16 per share, which exceeded initial expectations of 5.5 million shares priced between $11 and $12.[20] This pricing adjustment reflected strong investor interest in the information technology services firm founded by Ross Perot in 1988.[21] The offering raised approximately $104 million in net proceeds for the company, representing about 7.7% of its total shares outstanding and valuing Perot Systems at roughly $1.35 billion on a fully diluted basis.[22][23] Ross Perot, the company's largest shareholder with approximately 31.7 million shares, did not sell any of his holdings in the IPO but stood to benefit substantially from the stock's debut performance; he rang the opening bell at the NYSE to commemorate the event.[21] The proceeds were intended to support general corporate purposes, including potential acquisitions and working capital to fuel expansion in IT consulting and systems integration services.[24] On its first day of trading, Perot Systems' shares opened at $16 and surged dramatically, closing at $43.50—more than 172% above the offering price—and reaching intraday highs above $45.[25][21] This strong debut was attributed to the company's solid financials, including $28.2 million in net income for the prior year, and its key client relationships, such as a major 1996 contract with UBS AG that accounted for about a quarter of 1998 revenues.[24][21] The IPO's success also highlighted investor confidence in the IT services sector amid the late-1990s technology boom, positioning Perot Systems for further growth before its eventual acquisition by Dell in 2009.Acquisition by Dell
On September 21, 2009, Dell Inc. announced a definitive agreement to acquire Perot Systems Corporation in an all-cash transaction valued at approximately $3.9 billion.[26] Under the terms, Dell would pay $30 per share for all outstanding shares of Perot Systems' Class A common stock, representing a 68% premium over the company's closing stock price on September 18, 2009.[27] The deal was unanimously approved by the boards of directors of both companies and was funded entirely from Dell's existing cash reserves.[26] The acquisition was strategically aimed at bolstering Dell's position in the enterprise IT services market, where it sought to diversify beyond hardware sales into higher-margin services such as consulting, applications management, and business process outsourcing.[7] Perot Systems' established expertise in sectors like healthcare, government, and financial services complemented Dell's customer base, enabling the combined entity to offer end-to-end solutions that integrated hardware, software, and services to reduce customer complexity and costs.[26] Dell's CEO Michael Dell emphasized that the merger would "significantly expand our enterprise solutions capability" by combining two "iconic IT brands."[26] Perot Systems' CEO Peter Altabef noted it would create a "powerful IT and business process solutions organization."[26] Analysts viewed the move as Dell's push to compete more effectively with rivals like Hewlett-Packard and IBM in the growing $800 billion global IT services industry.[27] The transaction proceeded through a tender offer, with Dell commencing the purchase of shares shortly after the announcement. Regulatory approvals were obtained, including from the U.S. Department of Justice and international authorities, without significant hurdles.[28] On November 3, 2009, Dell completed the tender offer, acquiring more than 90% of Perot Systems' shares, which allowed it to proceed with the merger.[28] The acquisition officially closed later that month, integrating Perot Systems as a wholly owned subsidiary and forming the new Dell Services division, with Altabef appointed as its president reporting directly to Michael Dell.[28] The deal was expected to generate $300 million in cost synergies over two years and become accretive to Dell's GAAP earnings by fiscal 2012.[26]Post-Acquisition Developments
Following its acquisition by Dell in November 2009 for $3.9 billion, Perot Systems was rebranded as Dell Services and integrated into Dell's broader IT infrastructure and consulting operations, enabling Dell to bundle hardware sales with end-to-end services for clients in healthcare, government, and other sectors.[7] This merger expanded Dell's service capabilities, including application development, infrastructure management, and business process outsourcing, while leveraging Perot's established expertise in federal government contracts through vehicles like GSA Schedules and DHS EAGLE.[29] Under Dell, the unit achieved notable recognitions, such as ranking #11 on the 2010 Washington Technology Top 100 list of government contractors and leadership positions in Gartner's 2009 Magic Quadrant for desktop and help desk outsourcing services.[29] In March 2016, Dell announced the sale of Dell Services—encompassing the former Perot Systems operations—to NTT DATA Corporation for $3.05 billion, a transaction completed in November 2016 that allowed Dell to refocus on its core hardware and enterprise solutions amid its privatization.[30][31] The acquisition bolstered NTT DATA's North American presence, adding approximately 30,000 employees and $4.5 billion in annual revenue, with a strong emphasis on industry-specific IT solutions for healthcare, financial services, manufacturing, and public sectors.[31] Post-acquisition integration at NTT DATA involved a comprehensive technical migration, including onboarding 30,000 employees to unified systems over 22 months, which was completed ahead of schedule and under budget by CIO Barry Shurkey, enhancing operational efficiency and global service delivery.[32] NTT DATA adopted a vertical-led go-to-market strategy from Dell Services, focusing on digital transformation services like cloud migration and cybersecurity, which solidified its position as a top-tier IT services provider and earned accolades such as Deal of the Year from D CEO magazine in 2017 for the acquisition's strategic impact.[33][34] By 2025, the integrated operations continued to drive NTT DATA's partnerships, including recognition as Dell Technologies' Global Alliances Partner of the Year for collaborative advancements in hybrid cloud and generative AI solutions.[35]Business Operations
Core Services
Perot Systems specialized in providing a range of information technology services, primarily focused on helping clients integrate and optimize their IT infrastructures to support business objectives. The company's offerings were structured around three main groupings: business consulting, software engineering and integration, and technology infrastructure services.[36] These services encompassed consulting to identify IT needs, development of custom software solutions, and management of hardware and network operations.[37] In business consulting, Perot Systems advised clients on strategic IT implementations, including systems management, customer relationship management (CRM), and electronic commerce strategies. For instance, the company developed B2B e-commerce exchanges for clients like W.W. Grainger and energy cost reduction applications such as iQom for Wyndham Hotels.[36] Software engineering and integration services involved creating tailored applications, data warehousing, and integration of legacy systems with modern technologies, such as custom applications and business intelligence tools.[14] Notable examples include the development of health-care payment software through the acquisition of Health Systems Design Corp. and Internet-based databases like SportsTrac for college recruiters.[36] Technology infrastructure services formed a foundational part of Perot Systems' portfolio, covering facilities management, data processing, and IT operations outsourcing. These included network management, data center operations, and electronic funds transfer systems, often delivered through long-term contracts.[16] The company also provided specialized solutions like digitization and automation of medical records in healthcare and virtual integration services to enhance scalability.[14] Overall, these core services enabled Perot Systems to support diverse operational needs, from application development to full IT outsourcing.[3]Key Industries
Perot Systems primarily served the healthcare, government, financial services, manufacturing, and consumer products sectors, delivering IT services, business process outsourcing, and infrastructure management tailored to each industry's needs.[26][38][14] In healthcare, which accounted for approximately 48% of the company's revenue in 2008, Perot Systems specialized in digitizing and automating medical records, supporting operations in about 1,000 hospitals worldwide and serving around 200,000 physicians.[26][7] The firm provided end-to-end IT solutions, including electronic health records and revenue cycle management, helping providers streamline patient care and administrative processes.[14][38] The government sector contributed about 25% of revenues, with Perot Systems focusing on federal, state, and defense contracts in areas such as homeland security, intelligence, and defense systems.[26][7] Notable engagements included IT support for nuclear submarine programs and broader civilian and defense infrastructure, leveraging long-term relationships that generated nearly 90% of sector revenue.[39][38] Financial services, encompassing banking and insurance, represented a core commercial area where Perot Systems managed over 3 million life insurance policies annually and provided solutions for credit unions and global finance operations.[26][14] The company offered consulting, applications development, and business process services to enhance efficiency in transactions, risk management, and compliance.[38][40] Manufacturing and consumer products sectors benefited from Perot Systems' expertise in supply chain optimization, enterprise resource planning, and custom IT infrastructure, supporting industrial clients with scalable solutions to improve production and distribution.[14] These areas fell under the broader commercial category, comprising around 27% of total revenues in 2008, with an emphasis on long-term outsourcing partnerships.[26]Global Presence
Perot Systems expanded its operations internationally through a combination of organic growth, strategic acquisitions, and the establishment of offshore delivery centers, enabling the company to deliver IT services and business solutions to clients across multiple continents. By the mid-2000s, the firm had developed a robust global footprint, with subsidiaries and offices supporting key industries such as healthcare, finance, and government. This international strategy was particularly emphasized in offshoring, where cost-effective locations like India played a central role in scaling operations. As documented in its 2005 SEC filing, Perot Systems maintained subsidiaries in at least 18 countries, including the United States, Canada, Mexico, the United Kingdom, Germany, France, Italy, the Netherlands, Switzerland, Luxembourg, Ireland, Hungary, India, Japan, Singapore, Hong Kong, Malaysia, Mauritius, Bermuda, and the United Arab Emirates.[41] In North America, beyond its headquarters in Plano, Texas, the company operated in Canada and established a technology center in Guadalajara, Mexico, in 2006 to handle outsourced IT services such as desktop support and infrastructure management for U.S. and European clients.[42][43] Europe represented a core region for Perot Systems' growth, with multiple subsidiaries facilitating consulting and systems integration services. Operations included entities in the UK (such as Perot Systems Europe Limited), Germany (Perot Systems GmbH), France (Perot Systems S.A.S.), Italy (Perot Systems S.r.l.), and Ireland (Persys Ireland Limited), among others, allowing the company to serve major European enterprises and support cross-border projects.[41] In the Asia-Pacific region, Perot Systems focused heavily on offshoring to leverage skilled labor pools. India emerged as a primary hub, with subsidiaries like Perot Systems Private Limited and centers in locations such as Noida and Bangalore employing thousands of professionals by the late 2000s; for instance, the company had over 6,000 employees in India as of 2006, contributing to its business process and application services.[42][44] Additional presence included Japan (Perot Systems (Japan) Ltd.), Singapore (Perot Systems Asia Pacific Pte Ltd.), Hong Kong (Perot Systems Hong Kong Limited), and Malaysia (Perot Systems TSI (Malaysia) Sdn. Bhd.). In late 2009, just prior to its acquisition by Dell, Perot Systems bolstered its footprint by acquiring BearingPoint Management Consulting (Shanghai) Ltd., gaining offices in Shanghai and Beijing to expand management and technology consulting in China.[45] The company's global workforce reflected this expansion, reaching approximately 23,000 employees by 2009, with about 65% based in the U.S. and the remaining 35% distributed across international sites, particularly in low-cost offshore locations like India to drive efficiency in IT outsourcing.[46] This structure positioned Perot Systems as a competitive player in the global IT services market, with a focus on nearshoring in Mexico and offshoring in Asia to meet diverse client needs.Leadership
Founders
Perot Systems was founded in June 1988 by H. Ross Perot, a prominent American businessman and former presidential candidate, along with his son Ross Perot Jr. and eight other associates, many of whom were alumni from Perot's previous venture, Electronic Data Systems (EDS).[1][14] The company was established in Plano, Texas, as an information technology services provider, drawing on Perot's experience in building EDS into a major IT firm before its sale to General Motors in 1984.[5] H. Ross Perot served as the primary visionary behind the founding, leveraging his investment vehicle, Hillwood Management Co., to launch the new enterprise after stepping away from EDS.[5] His leadership emphasized innovative IT solutions for industries such as healthcare, manufacturing, and government, including a growing focus on digitizing medical records and automating processes.[14] Ross Perot Jr., then in his early career, acted as co-founder and played a key operational role, later ascending to positions including president, CEO, and chairman of the board, where he oversaw strategic growth until the company's acquisition by Dell in 2009.[47][48] The founding group's composition reflected Perot's network of trusted executives from EDS, enabling rapid scaling; by the early 1990s, Perot Systems had expanded to serve global clients and achieved significant revenue milestones, underscoring the founders' emphasis on high-quality, client-focused IT services.[1][14] This collaborative founding approach positioned the company as a successor to EDS's legacy in the burgeoning IT services sector.Executive Leadership
Perot Systems was founded in June 1988 by H. Ross Perot, his son Ross Perot Jr., and eight other associates, including Morton H. Meyerson, with Perot serving as the initial chairman and guiding the company's early strategic direction in information technology services.[16] In 1992, Perot stepped down from active leadership to pursue his presidential campaign, handing over the CEO role to co-founder Morton Meyerson, who had previously been a key executive at Perot's earlier venture, Electronic Data Systems (EDS).[1] Meyerson led as CEO until September 1996 and remained chairman until early 1998, overseeing the company's expansion into healthcare and other sectors during a period of rapid growth.[16] To bolster management expertise, Perot Systems recruited James A. Cannavino in 1995 from IBM, where he had been a senior executive; Cannavino assumed the role of president and later CEO from September 1996 to 1997, focusing on operational growth.[1] Concurrently, in 1996, James A. Champy joined as chairman of the consulting practice and head of strategy, a position he held until the 2009 acquisition by Dell, contributing to business process reengineering initiatives that became a hallmark of the firm's offerings.[49] Cannavino's tenure ended amid financial challenges in 1997, prompting H. Ross Perot's return in November 1997 as interim CEO and chairman without compensation, stabilizing operations until a permanent successor was appointed.[16] In August 2000, Ross Perot Jr., H. Ross Perot's son and a co-founder with real estate and business development experience, was named president and CEO, succeeding his father while the elder Perot retained the chairmanship.[50] Perot Jr. served in this dual capacity until September 2004, emphasizing global expansion and the company's initial public offering in 1999, which raised capital for further investments in IT infrastructure.[51] Peter Altabef, who had joined the company in 1993 as general counsel, succeeded Perot Jr. as president and CEO in 2004, leading through a phase of sustained revenue growth and culminating in the $3.9 billion acquisition by Dell in November 2009.[52] Under Altabef, key operational roles were strengthened, including the promotion of Russell Freeman to chief operating officer in 2007 after seven years as CFO, enhancing financial and operational efficiency.[53] Post-acquisition, Altabef continued as head of Dell Services, integrating Perot Systems' capabilities into Dell's portfolio until 2011, while Ross Perot Jr. joined Dell's board briefly.[8] The original Perot Systems executive structure dissolved with the merger, but its leadership legacy influenced Dell's services division, which was later sold to NTT Data in 2016.[54]Recognition and Impact
Awards and Rankings
Perot Systems received multiple recognitions from KLAS Research, a leading analyst firm for healthcare IT performance, particularly in clinical and revenue cycle services. In 2008, the company was ranked #1 for Clinical Implementation Services, with all performance scores exceeding the industry average, highlighting its expertise in deploying clinical systems using clinician-led teams.[55] Following its acquisition by Dell in 2009, Perot Systems' healthcare division contributed to a #1 ranking in Extended Business Office Services in KLAS's 2010 report, evaluating revenue cycle management and outsourcing effectiveness.[56] Additionally, in the 2009 KLAS Best in KLAS Awards, Dell Perot Systems achieved a score of 92.9 in Patient Accounting and Management for community hospitals, underscoring its strong post-acquisition performance.[57] In broader IT services evaluations, Perot Systems was consistently ranked among top performers. Fortune magazine placed the company second in its "Most Admired Companies" list for the IT services sector in both 2006 and 2007, based on criteria including innovation, quality of management, and long-term investment value, trailing only Accenture.[58][8] The firm also appeared in the top five for three consecutive years in Fortune's IT services rankings prior to the acquisition. In government contracting, Washington Technology's Top 100 list featured Perot Systems annually, with $141.9 million in federal revenue ranking it 47th in 2004, including $58.8 million from defense contracts.[40] The Outsourcing Center awarded Perot Systems several "Best Partnership" honors for collaborative client relationships. In 2004, it received the top award with Owens & Minor for IT outsourcing in healthcare distribution, praised for transforming operations and achieving award-winning efficiency.[59] This was followed by the 2006 Best ITO award with Vanguard for infrastructure management and the 2007 Best Partnership with Old Mutual Financial Network for seamless application migration handling high volumes.[60] In 2008, Perot Systems and Harvard Pilgrim Health Care earned Best Partnership for health plan IT services, marking the third such honor in four years.[61] These awards, selected by industry experts and sponsored by groups like Everest and Forbes, emphasized Perot Systems' role in delivering measurable business outcomes through outsourcing.[62]| Year | Award/Ranking | Category | Source |
|---|---|---|---|
| 2004 | Best Partnership (with Owens & Minor) | Outsourcing Excellence | Outsourcing Center[59] |
| 2006 | #2 Most Admired | IT Services | Fortune[58] |
| 2006 | Best ITO (with Vanguard) | Outsourcing | Outsourcing Center[60] |
| 2007 | #2 Most Admired | IT Services | Fortune[8] |
| 2007 | Best Partnership (with Old Mutual) | Outsourcing | Outsourcing Center[62] |
| 2008 | #1 Clinical Implementation Services | Healthcare IT | KLAS[55] |
| 2008 | Best Partnership (with Harvard Pilgrim) | Outsourcing | Outsourcing Center[61] |
| 2009 | 92.9 Score in Patient Accounting | Healthcare Services | KLAS[57] |
| 2010 | #1 Extended Business Office Services | Healthcare IT | KLAS[56] |