Cendant to outsource IT to IBM in $1.4B deal

Cendant Corp. will outsource much of its IT operations to IBM Corp. in a 10-year, US$1.4 billion deal that covers more than 40 business units in the real estate, financial and travel industries.

In an announcement Monday, IBM said it would manage the New York-based conglomerate's data operations, run its servers and host many of the Web sites and interactive services at Cendant's subsidiaries.

Among the companies Cendant owns are the travel reservation operations at Galileo International Inc., one of the world's largest global distribution systems; Century 21 Real Estate Corp.; Howard Johnson International Inc.; and Avis Group Holdings Inc.

"Given IBM's strong global travel industry expertise, the company is uniquely equipped to help us establish a world-class data processing and technology infrastructure that will be second to none and improve our ability to deliver the best value to our customers," Tom Christopoul, senior executive vice president and chief administrative officer of Cendant, said in the announcement.

Galileo alone handles reservations for 500 airlines, 47,000 hotel properties and 40 rental car companies over a network with 44,000 travel agents.

According to IBM spokeswoman Linda Hanson, IBM will manage more than 1,400 servers from Cendant's data center in Denver.

This outsourcing deal follows a similar announcement by Galileo rival Sabre Holdings Corp. in Fort Worth, Texas, which sold its airline IT outsourcing business to Electronic Data Systems Corp. in Plano, Texas, in March for $3 billion.

An IBM Global Services facility in Toronto will also provide help desk and desktop support services to thousands of Cendant employees at Avis, Wizcom and Cendant's real estate businesses, Hanson said. It will provide on-site desktop support services to thousands of employees at Cendant's corporate offices and in several remote locations. In addition, about 500 Cendant employees will join IBM Global Services.

IBM signed two other outsourcing deals this year with travel providers: Air Canada and Japan Airlines Co.

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