Ericsson Hands IT Over To HPEricsson Hands IT Over To HP

Hewlett-Packard will run the IT department for Ericsson in what it calls one of its biggest outsourcing deals of the year.

The five-year contract, finalized Wednesday, calls for HP to manage the Swedish telecommunications company's IT infrastructure and hire 1,000 of its employees. A few hundred IT employees will remain at Ericsson to manage its network, which won't be outsourced, and for some application development work, HP Services VP Juergen Rottler says. Ericsson had several thousand IT employees at its peak, but like other financially troubled telecom vendors it reduced staff size companywide in recent years to cut costs.

HP will use employees in countries such as China, Costa Rica, India, the Philippines, and Poland to fill the Ericsson contract. "We're utilizing our global capabilities, and that was an important consideration for Ericsson," says Rottler, adding that the global reach helps it deliver IT services at a lower cost. Ericsson has some 100 divisions worldwide.

HP says it will help Ericsson create tighter links between business and IT. The contract calls for it to implement a common global operating environment, consolidate servers, automate operations using HP's data-center technologies, manage and consolidate Ericsson's data center and help-desk service, and standardize desktop systems. Financial terms of the deal were not disclosed.

HP, which ranked No. 1 in information Research's Analyzing The Outsourcers survey in November, has landed several large outsourcing deals this year. In April, Procter & Gamble Co. agreed to a $3 billion, 10-year contract under which HP will manage a broad range of P&G's IT operations.