Nextel Calls Up EDSNextel Calls Up EDS

For the second time in less than a week, Nextel Communications Inc. has turned to an IT service provider to help the wireless communications company cut costs and develop new technology. Nextel revealed Wednesday that it has signed a five-year, $234 million IT outsourcing agreement with EDS through which EDS will manage Nextel's corporate data center, database administration, help desk, and desktop services.

The outsourcing deal is expected to trim $140 million from Nextel's IT budget over the life of the contract. Some of this will be achieved by transitioning about 290 Nextel IT workers to EDS, while the rest will come by passing hardware and software costs along to EDS. The business agreement was two years in the making, says Nextel senior VP and CIO Dick LeFave, who joined the company three years ago.

Nextel provides Sun Microsystems' Java technology over its wireless phones, and the company expects to have 1 million Java-enabled handsets in the marketplace by the end of March. To move forward with the development of its wireless technology, Nextel has hired EDS to operate and manage its information technology, LeFave says.

Nextel's contract with EDS comes just a few days after Nextel signed an eight-year, $1.2 billion deal to outsource its customer-management operations to IBM Global Services and TeleTech Holdings Inc. Nextel will transition more than 4,500 employees to IBM and TeleTech and expects to save $1 billion throughout the life of that contract.