Vodafone Signs EDS, IBM for Global Outsourcing Deal
Vodafone's embattled chief executive Arun Sarin has made cost cutting one of his main priorities, as the company struggles with decline in its core European markets. Some 6,000 employees will be affected by the forthcoming outsourcing deals. Most of the impacted staff are expected to transfer to EDS and IBM, with the remainder to be retained by Vodafone.
Vodafone Group (NYSE: VOD) said it will outsource a number of key back-office IT functions to EDS and IBM (NYSE: IBM) , as the mobile phone giant slashes costs amid a steep slowdown in its core markets.
Vodafone said the two U.S. tech firms would take over application development and maintenance services for all of its IT systems across the globe.
Those functions ate up 560 million pounds (US$1.05 billion) last year, and outsourcing them should cut unit costs by 25 to 30 percent within three to five years, said Vodafone.
Contracts will be signed within the next couple of weeks, although Vodafone did not reveal how much it would pay EDS and IBM.
Vodafone's embattled chief executive Arun Sarin has made cost cutting one of his main priorities, as the company struggles with decline in its core European markets.
Some 6,000 employees will be affected by the forthcoming outsourcing deals, said a spokesperson for Vodafone. Most of the impacted staff are expected to transfer to EDS and IBM, with the remainder to be retained by Vodafone, he added.
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