T-Systems will provide global data centre and SAP support via a private cloud infrastructure running on a private secure network that links Philips data centres in the Netherlands, US, Europe, Asia and South America.
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Some 185 Philips staff will join T-Systems. Financial details were not disclosed.
Philips CIO Maarten de Vries said Philips would in future operate its IT on a pay as you go basis. "This way we can draw on resources dynamically as necessary while paying only for the computer and storage resources we actually use. This will enhance our flexibility and lower our costs," he said in a statement.
The Netherlands has been a hot market for T-Systems. It recently signed a €1bn outsourcing deal with Anglo-Dutch oil firm Shell, and with brewer Heineken, for an unspecified value.
It also took over some 90 European clients from SAP, making it the top supplier of IT to SAP users in Europe.