Equifax has renegotiated and extended an outsourcing contract with IBM that makes the engagement more flexible and easier to adapt as Equifax's business strategies and needs evolve and change, the companies said Thursday.
"As their business grows, they can scale up (the services), and as their business shrinks in different parts of the world, they can reduce (them). We didn't have that flexibility in the other agreement," said Philip Guido, general manager of the Financial Services Sector at IBM Global Services, IBM's IT services unit.
Thus, the contract has now become what IBM calls an "on demand" deal, which gives the client the flexibility to adapt it and to pay based on consumption levels. "The flexibility is dramatically increased and it puts more of a responsibility on us" to make sure the services mirror Equifax's business, he added.
The contract calls for IBM to manage Equifax mainframes, mid-range servers, Web systems, networks and help desk. Having a malleable outsourcing contract that can be adapted based on market and business changes is a must for any global company facing tough competition, Guido said.
Equifax, an Atlanta company that employs about 5,000 people in 13 countries, compiles and provides credit reports to consumers, businesses and government agencies. It had revenue of $1.1 billion in 2002.
Equifax first gave IBM an outsourcing contract in 1993. They extended and expanded that contract in July 1998 for 10 additional years, which, combined with other existing agreements at the time, put the deal's aggregate value at about $900 million. The extension and expansion announced Thursday replaces the 1998 contract and launches a new 10-year engagement worth a total of about $800 million, the companies said.
In addition to getting a more flexible outsourcing contract, Equifax also expects the new agreement to yield it significant savings: $5 million in 2003, $9 million in 2004 and over $20 million annually by 2006, the companies said.
Equifax also expects the contract to makes its IT operations more productive and reliable and better able to support its efforts to develop and market new products, the companies said. Having greater control over its IT investments and more flexibility to adopt new technologies are also goals for Equifax, the companies said.