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HP Notches $500M in Outsourcing Deals

Racking up large outsourcing contracts has been something of a chore in recent years because of the chilly economy, but the spending freeze is beginning to thaw -- and HP is benefiting.

HP on Wednesday closed three new IT outsourcing contracts totaling nearly $500 million. The company inked deals with MCI, Standard Register and TD Bank Financial Group.

In the five-year, $112 million deal with MCI, HP will provide daily technical support services for employees at more than 600 U.S. sites and HP Services will also handle remote server management and asset management services, streamlining support to improve help desk performance.

HP will return the favor, via a five-year, $125 million agreement to buy communications services from MCI. The telecom will also become one of the selected communications providers for HP's business customers.

Another HP win from document management technology vendor Standard Register Corp. is worth $53 million over five years. HP will consolidate SR's multi-vendor environment of 650 servers, a wide area network and 30 software applications for 4,100 desktops and 5,000 employees.

The two companies will go to market together to serve clients in the healthcare and financial services markets, while HP will collaborate with SR on its own print and document management activities, taking on around 80 former SR employees.

In a third agreement, HP will upgrade and manage the ATM network for TD Bank Financial Group, while leading a business transformation initiative. The seven-year agreement is valued at $320 million.

Ann Livermore, HP's executive vice president, Technology Solutions Group, touted the deals as indications of the success of the company's Adaptive Enterprise initiative. In a statement, she said that the deals will create enterprises "where business and IT are synchronized to capitalize on change."

HP Services clearly knows how to profit from the outsourcing wave: Its last-quarter outsourcing business was up more than 50 percent over to the same period of the previous year. In April, it landed contracts with the Department of Veterans' Affairs ($784 million) and Proctor & Gamble ($3 billion) to handle record-keeping and accounts payable respectively.

It's a tide that's floating lots of boats, in fact. In April, services competitor IBM added $575 million over five years to an existing IT services agreement with Morgan Stanley. Electronic Data Systems is in the second year of an eight-year, $63 million outsourcing contract with Marathon Oil. In May, it added $100 million to its five-year agreement with Nextel Communications, then nabbed a $93.7 million contract to manage the Arkansas Department of Human Services' Medicaid program.