Dive Brief:

• Hewlett Packard Enterprise announced Tuesday that it plans to spin off and merge its IT services division with Computer Sciences Corp.

• The deal will allow the company to better focus on its enterprise group and growth in new areas, the company said. 

• HPE said the deal could save the company $1 billion in its first year.

Dive Insight:

CEO Meg Whitman has been working to better focus HPE on enterprise sales and to get out of slow growth areas since HP officially filed to split into two companies last July. The outsourced technology services and consulting market—which includes call centers and client network maintenance—has been shrinking, making it a target for disposal.

Hewlett-Packard got into the consulting business when it purchased Electronic Data Systems (EDS) in 2008, but given HPE’s interest in focusing on its bigger enterprise group unit, the business no longer seemed to fit. Earlier this year, HPE announced that private equity firm Blackstone Group LP would purchase its majority stake in Indian outsourcing firm Mphasis Ltd. for $825 million HP Enterprise inherited the Mphasis stake through its purchase of EDS.

An HPE statement said CSC Chief Executive Officer Mike Lawrie will lead the new company and its board will be split evenly between directors nominated by HPE and CSC, including Whitman. CSC will also add HPE’s current customers.

HPE has been struggling to rein in expenses and reinvent itself amid the shifting technology landscape, and the deal with CSC appears to be another step in that process. Earlier this month, HPE announced a new VC program targeting startups to help the company reinvigorate its offerings and better compete with its rivals.