Management Toolkit

IBM snares big European outsourcing deals

Ed Frauenheim CNET News.com

Published: 22 Dec 2003 08:35 GMT

IBM on Friday announced two information technology services contracts, which, combined, are worth hundreds of millions of dollars.

One is a multiyear agreement worth up to $1.2bn (£0.68bn) with European bank BNP Paribas. The other is a 10-year IT integration and management contract for more than $495m with Auna Telecomunicaciones, a telecommunications service company in Spain.

The wins add to the momentum for Big Blue's services division, which is the world's largest provider of IT services. On Tuesday, IBM announced that it won a $600m IT services contract from financial institution ING Groep. Earlier this month, IBM said it landed outsourcing deals with French tire maker Michelin and Swiss financial company Zurich Financial Services.

Although contracts that call for revenue in the hundreds of millions of dollars are impressive, large-scale IT service deals often entail significant costs for the service provider, such as investments in technology.

BNP Paribas and IBM will set up a joint venture with 450 employees to transform the bank's IT into "an on-demand infrastructure," according to IBM. Both BNP Paribas and IBM will staff the organisation to help BNP Paribas improve performance and save costs.

IBM has been pushing the concept of "on demand" IT, which refers in part to technology systems that can respond smoothly to fluctuations in the need for computing power. IBM rivals Hewlett-Packard and Sun Microsystems are working on similar efforts.