IBM Corp. and telecommunications carrier Cable & Wireless PLC (C&W) have extended an IT outsourcing contract between the two companies with a deal worth US$18 million over eight years, the companies announced today.
"This is an extension of our original, 9-year $30 billion outsourcing agreement signed in September 1998," said Richard Atkins, IBM general manager, e-business housing services, EMEA (Europe, the Middle East and Africa) at a press conference.
Under the deal, IBM will perform a range of IT functions in support of C&W's customers, primarily desktop support but also including Web hosting.
The contract will involve the transfer of 17 C&W employees to IBM, Atkins said. The support system, running within C&W, will serve a total of 690 end-users, serving C&W telecommunications lines and network services customers, Atkins said.
"We went to IBM initially because we were having difficulty finding the right kind of IT-skilled staff. I think we went through 8 CIOs (chief information officers) in 9 years. Our deal with IBM is a U.K.-focused deal, but it is a company that's got a global understanding of the e-commerce marketplace," said Tom Christie, C&W senior vice president of global IT.
The Web hosting market in Western Europe is set to grow from an estimated $907 million at the end of this year to more than $5 billion by 2004, according to a report published last August by market analysis company International Data Corp. (IDC). (IDC is owned by International Data Group, the parent of the IDG News Service.) IBM is experiencing growth that is in line with those numbers, according to Atkins.
"Most of the deals that we see now for Web hosting are bigger deals that come in at about 10 years each. The smaller ones are about 5 years in length. It is because large global players want to move fast, and that is encouraging larger deals. It also leaves IT directors to spend more time on their core business," Atkins said.
"In particular, banking and telecommunications companies are the two areas that are moving very, very fast," Atkins said.
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