IBM Does a US$252M Services Tango with Telefónica

FORT LAUDERDALE, FLA. (06/27/2000) - Telefónica de Argentina SA has decided to outsource most of its computing operations to IBM Corp. and has awarded Big Blue a six-and-a-half year contract worth US$252 million, the companies said.

As part of the agreement, IBM will hire about 130 Telefónica de Argentina information technology staffers and buy part of the carrier's IT assets for $37.5 million, the companies announced Monday.

By hiring IBM to handle its computing operations, Telefónica de Argentina, the Argentina subsidiary of Spain's Grupo Telefónica SA, will save about $50 million annually and be able to focus on its core telecommunications business, the companies said.

The IT tasks outsourced to IBM include the operation of data centers, help desks and management of distributed systems involving about 15,000 users.

Grupo Telefónica and IBM plan to reach similar agreements elsewhere in the world, they said.

In 1999, Grupo Telefónica, which has operations in 24 countries, had revenue of $22.8 billion, while IBM had revenue of $87.5 billion.

Telefónica de Argentina, based in Buenos Aires, can be reached at IBM, in Armonk, New York, is at

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