HP expands deal with DirecTV

Hewlett-Packard on Thursday will announce an expanded IT services deal with DirecTV worth hundreds of millions of dollars, continuing the momentum of HP's outsourcing arm.

The new five-year contract calls for HP to manage the technology behind DirecTV's customer billing. DirecTV, which is a unit of General Motors' Hughes Electronics, has 11 million satellite TV subscribers.

Precise terms of the deal were not disclosed. A representative from DirecTV confirmed the agreement but could not immediately provide additional comment.

HP has been hosting DirecTV's billing computer infrastructure for nearly 10 years. With the new contract, HP will also take over the management of DirecTV's billing software system. HP plans to use billing software from DST Innovis.

HP also will upgrade the billing system's hardware, with HP AlphaServer GS series servers running HP's Tru64 UNIX software and HP StorageWorks data-storage equipment.

The new gear should prepare DirecTV to handle surges in customer transactions, such as when people sign up during promotions or when the satellite TV service offers a pay-per-view special event such as a prize fight, said Joe Hogan, vice president of managed services for HP Services.

HP said its outsourcing contract would not have been affected by the proposed merger between Hughes and EchoStar Communications, which owns the Dish Network satellite TV network. On Tuesday, Hughes and EchoStar called off the merger.

The DirecTV deal is one of the biggest 10 in the past few months snagged by HP managed services, a division of the broader HP Services unit focused on tasks such as running a company's IT infrastructure or operating its tech support service.

In September, HP announced a seven-year, $1.29 billion deal to manage a major portion of the Canadian Imperial Bank of Commerce's IT infrastructure.

HP's managed services wing has attracted $2.5 billion worth of business since Hewlett-Packard and Compaq Computer merged seven months ago, Hogan said. "It's definitely been a high-growth engine for HP Services since the merger," he said

IT outsourcing is gaining steam in general, as companies look to trim costs. Market research firm Gartner has forecast that the IT outsourcing market in North America will jump from $101 billion in 2000 to $160 billion in 2005. Other competitors in the IT outsourcing field include U.S.-based companies IBM, Electronic Data Systems, and Computer Sciences, as well as off-shore players such as India-based Infosys Technologies Limited and Wipro Technologies.

HP's services unit has $15 billion in annual revenue and more than 65,000 employees. The company will take another step Thursday on the outsourcing front by announcing a plan to jointly provide outsourcing services with NEC, which makes broadband network technologies and offers outsourcing services. HP and NEC said they would initially target global customers based in China, Japan and the United States with plans to expand to other regions in the future.