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Big Blue said it landed a 10-year IT services contact worth about $115 million with Malaysia Airlines, as well as a five-year IT outsourcing pact for an undisclosed amount with Chilean telecommunications operator Telefonica del Sur. IBM also said its previously announced IT outsourcing deal with John Hancock Financial Services will last six years and generate $254 million in revenue.
To cut costs and focus on core business operations, companies have been turning to service providers such as IBM, Electronic Data Systems and Hewlett-Packard to take over computer systems or provide other IT services.
IBM, perhaps better known for its hardware and software, has been a leader in landing large-scale IT services contracts. Last year, it garnered the highest number of IT infrastructure outsourcing deals worth $1 billion or more, according to research company Gartner.
But big IT services deals often carry significant costs in terms of capital expenses and personnel additions. IBM, for example, has hired some 200 John Hancock employees, according to John Hancock Chief Information Officer Robert Walters. In the Malaysia Airlines deal, the airline's IT staff can choose between joining IBM or remaining employed with the airline.
The Malaysia Airlines contract calls for Big Blue to operate and manage the airline's IT infrastructure as well as its application maintenance and development. In the Telefonica del Sur deal, IBM will administer the IT infrastructure that supports the information and management systems of the telecommunications company and its affiliates.
At John Hancock, IBM is taking on responsibility for computers, storage systems and communications networks. The contract involves pay-as-you-go pricing, in keeping with IBM's "on demand" initiative.
Walters said roughly 60 John Hancock workers are losing their jobs in the wake of the deal, which became effective in July.
