Ericsson signs preliminary outsourcing deal with IBM

Ericsson on Tuesday announced its intentions to outsource its IT services worldwide to IBM.

The Stockholm-based company said it has signed a memorandum of understanding to outsource the development, implementation and maintenance of the IT applications supporting its business to IBM.

Ericsson declined to provide financial details of the deal.

The final agreement is expected to be signed during the third quarter of this year. The deal would include the transfer of 1,000 employees from Ericsson's Processing and Application Consulting division to IBM, said Ericsson spokeswoman Agneta Lundin-Carlsson.

This move is the second part of Ericsson's plan to save money in its IT operations by reducing its workforce to adjust to the decreasing needs of its customers.

Earlier this month Ericsson signed a five-year IT outsourcing deal with Hewlett-Packard Co.

Under that agreement, HP will assume responsibility for Ericsson's IT infrastructure in 100 countries, standardize the company's desktop environment and provide data center management and help desk support. And beginning next month, 1,000 employees of Ericsson's Global IT Services division will be transferred to HP.

In April, Ericsson said it plans to cut nearly 14,000 jobs by late 2004. The company said it expects to whittle its workforce from 61,000 at the end of the first quarter of 2003 to 52,000 by the end of the year, and to 47,000 by the end of the third quarter of 2004. At the end of the first quarter of 2002, the company employed around 107,000 people.

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