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Ericsson signs preliminary outsourcing deal

Ericsson signs preliminary outsourcing deal

Ericsson has announced its intention to outsource worldwide IT services to IBM.

The Swedish company said it had signed a memorandum of understanding to outsource the development, implementation and maintenance of the IT applications supporting its business to IBM.

Ericsson declined to provide financial details of the deal.

The final agreement is expected to be signed during the third quarter of this year.

The deal would include the transfer of 1000 employees from Ericsson’s Processing and Application Consulting division to IBM, an Ericsson spokesperson said.

This move is the second part of Ericsson’s plan to save money in its IT operations by reducing its workforce to adjust to the decreasing needs of its customers.

Earlier this month Ericsson signed a five-year IT outsourcing deal with HP.

Under that agreement, HP will assume responsibility for Ericsson’s IT infrastructure in 100 countries, standardise the company’s desktop environment and provide data centre management and help desk support. Beginning next month, 1000 employees of Ericsson’s Global IT Services division will be transferred to HP.

In April, Ericsson said it planned to cut nearly 14,000 jobs by late 2004.

The company said it expected to whittle its workforce from 61,000 at the end of the first quarter of 2003 to 52,000 by the end of the year. It would cut it further, to 47,000, by the end of the third quarter of 2004. At the end of the first quarter of 2002, the company employed about 107,000 people.

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