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IBM, Keane Win $1.2B IT Project

One of the nation's largest health insurers will pay IBM and Keane a total of $1.2 billion over the next 10 years to outsource information technology (IT) systems and software.

The moves are expected to save PacifiCare Health Systems , of Santa Ana, Calif., between $380 million and $400 million over the life of the contracts.

Howard G. Phanstiel, PacifiCare's president and CEO, described the agreements as "another step toward enabling us to operate as a single company under a uniform business model and technology platform, as well as help reduce the cost of doing business," said

Under its $761 million pact, Armonk, N.Y.-based IBM will handle day-to-day management of PacifiCare's data centers, voice and data network and help desk. Big Blue will also operate the insurers' information distribution center in Cypress, Calif., which prints and ships claim forms and membership cards.

Meanwhile, Boston-based Keane will provide applications maintenance and enhancement services for fees of nearly $500 million. Another major component of the contracts is the transfer of approximately 650 positions from PacifiCare to IBM and Keane.

"We look forward to working with PacifiCare to ensure that IT investments translate into strategic assets for the organization," said Brian Keane, Keane's president and CEO.

The customer win adds to Keane's roster of health care clients. It also provides services and software to Tufts, Anthem and Baylor Healthcare, among others.

Shares of PHSY, IBM and KEA were all down just over 1 percent in midday trading.