IBM is to provide IT services to all of communication firm NTL's UK
and Ireland operations, in a deal valued at £1.4bn.
NTL has signed up with IBM until 2012, and with immediate effect,
has transferred 483 of its IT staff over to IBM.
The communications firm believes the deal, which IBM said was not
put out to competitive tender, will save it around £320m over the
life of the contract. NTL expects to see cost savings as early as
the end of this year.
However, cost was not the main impetus behind the contract,
according to IBM. "We're seeing enormous amounts of change," said
vice president of strategic outsourcing, Tony Cronin. "NTL is
integrating a lot of companies into its infrastructure and needs to
be able to react quickly to change. There's not a lot of emphasis
on cost [in this deal]."
The deal was agreed on the back of an existing contract that IBM
signed with Cable & Wireless in September 1998, before NTL
bought C&W's consumer division.
Fresh talks began in January of this year with both IBM and NTL
expecting to sign a contract lasting until 2008.
Cronin said NTL did not go to the open market for the contract,
preferring to sign a quick deal with an existing partner.
Under the terms of the contract IBM will look after all of NTL's IT
interests, although the communications firm will retain ultimate
control. The contract covers the provision of services,
applications, management, infrastructure and systems.
Cronin said IBM would also be providing consultancy services to
NTL, as it strives for total e-enablement.
It emerged on Tuesday that IBM is in the process of signing a
services deal valued at $6bn with Fiat in Italy. The NTL deal marks
a perfect end to the week for the company.
"We are seeing a very buoyant market and a lot of companies are
talking to us. Companies are having to respond quickly and move
quickly, and they want to move into the e-world," said Cronin.
Emma Nash