Telecoms company Sprint expects to save $150m over five years by outsourcing contracts with IBM Global Services and Electronic Data Systems (EDS), with the two contractors developing and maintaining some software systems.
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Sprint spokeswoman Alice O'Brien said some employees may, eventually, be laid off, but that the company will attempt to retrain the "several hundred" employees affected or find them jobs with the contractors. The company held meetings with those employees yesterday before the announcement of the contracts.
Sprint anticipates a three- to 12-month transition as it determines which services IBM and EDS will provide. The contracts are for five years, but Sprint did not disclose how much money they are worth.
The contractors will take over some application development and software maintenance functions at Sprint, although the company's secure strategic software projects will stay in house.
Some of the services IBM and EDS will provide have yet to be determined, but an EDS spokesman said his company intends to take over some of Sprint's primary applications development and management. An IBM spokeswoman said her company will focus on developing and modernising Sprint's human resources, business intelligence and other corporate systems.
Sprint's decision was driven by the realisation that the contractors could provide the services cheaper than Sprint could in house. "We looked at some of the facts that were in front of us," O'Brien said. "We needed technology faster, technology that was better and at a cheaper cost."
in July, IBM Global Services signed a deal with Qwest Communications International to provide database administration and data backup and recovery services. In the same month, IBM announced a deal with Ericsson to develop and maintain the company's IT applications.
Grant Gross writes for IDG News Service