Qwest hands IBM outsourcing contract

Qwest Communications International has awarded IBM an outsourcing contract valued at up to $2bn over 10 years.

Qwest Communications International has awarded IBM an outsourcing contract valued at up to $2bn over 10 years.

Although Qwest and IBM have opted not to disclose the deal's terms, SoundView Technology Group analyst Michael Bowen said in a research note that the companies signed a 10-year contract valued at between $1.8bn and $2bn.

Qwest is outsourcing general IT tasks which are common to large companies, including management of mainframe and mid-range servers, administration of databases, handling of electronic messaging systems and provision of back-up and recovery services, said Kate Varden, a Qwest spokeswoman. The contract takes effect immediately, she added.

Qwest expected the deal to generate savings and to allow it to improve its customer service.

About 600 Qwest IT employees in the US will be offered jobs with IBM, including 280 at Qwest's headquarters in Denver. The employees affected represent less than a tenth of the company's total IT workforce, Varden said.

Qwest outsources other IT tasks to other IT service providers, mostly on a project or an as-needed basis, but handles the bulk of its work in-house. Of the IT work that Qwest does outsource, this engagement with IBM is significant because it is a more formal, structured and long-term agreement than Qwest's average outsourcing engagement, she said.

Qwest is not outsourcing to IBM any "proprietary" or sensitive IT tasks related to competitive or customer operations.

The outsourcing deal affects Qwest operations in the US only, which is where the company generates most of its revenue and where most of its operations are located.

Qwest is a telecommunications service provider with 50,000 employees and 25 million residential and business customers. Its portfolio includes local, long-distance and data services.

Juan Carlos Perez writes for IDG News Service

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