IBM signs $1.1B services deal with ABB

Swiss power and automation technologies company ABB Asea Brown Boveri Ltd. (ABB) announced Monday a billion-dollar outsourcing deal with IBM, an arrangement ABB anticipates will save it US$500 million over the next decade.

IBM will take over all of ABB's IT operations and support in 14 countries in Europe and America, handling administration of servers, corporate networks, PCs and help desks. Ninety percent of ABB's IT infrastructure will be covered by the deal, the companies said.

The ten-year agreement is valued at $1.1 billion. The added cost of contracts signed between IBM and ABB at the end of 2001 brings the full value of the arrangement between the two companies to $1.7 billion.

More than 1,000 employees will transfer from ABB, based in Zurich, to IBM as part of the deal. Under pilot projects in Sweden and India, 510 ABB employees have already transferred; another 780 will shift in September, the companies said.

IBM is relying on its Global Services organization to rack up mega-deals. In a mid-July conference call, IBM Chief Financial Officer John Joyce said the company had signed services deals totaling nearly $3 billion since the June 30 end of its last fiscal quarter.

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