August 17, 2007 8:20 AM PDT

Reuters inks $1 billion IT outsourcing deal

Reuters is aiming to slash IT service delivery costs by a quarter through a $1 billion outsourcing deal with Fujitsu Services to launch a standardized IT platform across its global operations.

Around 300 IT staff will transfer across to Fujitsu as part of the 10-year deal, leaving an in-house service delivery team of 25. Reuters said there will be no layoffs.

Reuters CIO David Lister told, a CNET sister site, the deal will see annualized savings "in the region of 25 percent."

"We see our role as service aggregator not service provider," he said.

The contract covers Reuters' core IT internal services, including e-mail and desktop, and consolidates a number of existing deals. Fujitsu will also be responsible for the management of some of Reuters' other outsourcing suppliers such as Satyam.

"It addresses a lot of our legacy issues. We have acquired a lot of different systems and platforms over the years. This allows us to move onto a single, standardized, virtualized on-demand platform," Lister said.

Virtualization--both on the client and server--will be a key part of the contract, and Fujitsu has already begun work on an 18-month transformation plan.

"Whether inside an Internet cafe in Australia, at home or in the office, employees can access workplace applications," Lister said.

Andy McCue of reported from London.

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Doom to failure...
The key point of the outsourcing is to cut IT expenditures by 75% to 25% of current expenditures.

It will be interesting to see how "successful" they are in reaching their target and feedback on their QoS.
Posted by dargon19888 (412 comments )
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'nother CEO fails the intelligence test
Costs will go UP, way up because service will go down. Outsourcing just means you lose control of those costs and if the outsource company doesn't want to do something they'll just quote you a cost higher than you'll be willing to pay.
Posted by aabcdefghij987654321 (1721 comments )
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This is exactly what Lucent did 10 years ago
This is exactly what Lucent did 10 years ago. Prior to outsourcing, they were a profitable company with its stock was around $80. Lucent got into one of these 10 year outsourcing deals with IBM taking the employees, and support of desktop and legacy systems. It's true that Lucent didnt layoff anyone, but IBM did. Once support was no longer needed for these systems, IBM layed off the former Lucent employees. 10 years later, Lucent's stock was under $2 and the company was eventually bought by a foreign company.
Posted by rshnj (1 comment )
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