Telco sues IBM

Telecommunications company Sprint Nextel is suing IBM for $6.4m, claiming that its outsourcing deal has not delivered what was promised.

Telecommunications company Sprint Nextel is suing IBM for $6.4m, claiming that its outsourcing deal has not delivered what was promised.

Under the $400m 2004 five-year deal, later extended by a year, IBM was to develop and oversee software applications for the company. About 1,000 IT staff were transferred to IBM under the outsourcing arrangement.

Sprint has now filed a lawsuit in the US courts, claiming the deal has cost it money. IBM failed to provide “contractually promised productivity improvements for 2005”, it claims. A target to improve productivity by 6.4% was missed “by a wide margin”.

In papers filed with the Kansas district court, Sprint says IBM owes it at least $6.4m, to cover 119,000 hours’ work, under the provisions of the contract.

But IBM says Sprint is using an incomplete formula to measure productivity and the amount of hours owed, court papers show.

Sprint is understood to have brought some IT functions back in-house, while IBM continues to manage others. IBM is also managing Sprint’s customer services under a separate £2bn five-year deal, also dating from 2004.

 

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