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HP lands Ericsson outsourcing contract

Hewlett-Packard had beaten IBM to win Ericsson's outsourcing contract, which has been hailed as the most prestigious in Sweden.

The win comes almost a year after HP's Compaq acquisition and only days after HP secured a £1.9bn outsourcing contract from Procter & Gamble.

"Having beaten IBM to it feels especially good", says HP Sweden chief executive officer Roland Vejdemo. "This means a lot for HP Sweden. The purpose of merging Compaq and HP was to be able to challenge IBM, even when it's about contracts like this one."

The deal involves approximately 2,800 staff at Ericsson's IT departments all over the world, and the operation of mainframes, servers, desktops and helpdesk.

Computer Sweden has learned that Gartner acted as Ericsson's advisor in the deal, which is estimated at several billion Swedish kronor.

"It is too early to speculate on what the deal is worth. The final papers have not been signed yet", said Eva Sparr, information officer at Ericsson.

Ericsson is aiming for a final agreement to be signed before the end of June.

The decision to outsource Ericsson's IT business was taken in August 2002 by Ericsson chief operating officer Per-Arne Sandström. At an early stage, IBM and HP emerged as the main contenders.

"We chose HP because they met the requirements on our lists. Cost is a major factor, and a major goal is to reduce costs to 38 billion Swedish kronor [£2.85bn] at the end of the year," said Sparr.

Another part involving IT is the planned outsourcing of applications development. Here, IBM is still in the race, although Ericsson would not comment at this stage.

Ericsson's requirements for IT/IS outsourcing partners:

  •  Must be globally active
  • Must have a good reputation as an employer
  • Must have a broad range of services that matches Ericsson's requirements
  • Needs to have experience in IT operations, systems integration, outsourcing, applications management and development
  •  Must already have an outsourcing deal with a company equal in size and function to Ericsson
  • Good price

Ericsson's IT business goals:

  • Reduce costs for IT development
  • Consolidation of global IT infrastructure
  • Implementing SAP as a uniform business system
  • Consolidation applications and phasing out of redundant applications

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