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HP, Ericsson Finalize Outsourcing Pact

Computer systems vendor Hewlett-Packard has finalized details on a five-year outsourcing contract with Ericsson in which HP will provide global IT and on-demand computing services to the Swedish mobile phone maker.

Although the companies provided no details on the value of the contract, analysts noted in April, when the pact was announced, that the deal is substantial.

Palo Alto, Calif.-based HP said it plans to provide utility-like computing services to Ericsson, which are part of what HP describes as its Adaptive Enterprise strategy that helps companies "measure, architect and manage change by creating a tighter linkage between business and IT."

The latest outsourcing contract caps a string of positive developments for the number 2 computer maker, and number 1 printer company. Research firm IDC recently reported that HP snatched the number one spot in server sales from its rival IBM .

During an analyst day meeting in New York this week, HP CEO, Carly Fiorina, said the company expects to meet its earnings guidance for the second half of the year. Meanwhile, HP is pushing for more market share in key IT sectors such as outsourcing and consulting, which pits the company in increased competition with IT services vendors IBM, CSC and EDS .

HP also recently beat out some of those IT rivals to win a major outsourcing contract with consumer goods maker Procter & Gamble that is worth $3 billion over the life of the 10-year managed services pact.

In the Ericsson pact, HP's services division is expected to manage Ericsson's global IT infrastructure, which includes implementation of a common global operating environment; server consolidation; automation of operations with HP's Utility Data Center (UDC) technology; data center management and consolidation; help desk consolidation; and desktop standardization.

As is customary in extensive outsourcing contracts, IT professionals from Ericsson are expected to transition to HP, in this case some 1,000 staff. In addition, HP said it plans to purchase some of Ericsson's IT infrastructure, but Ericsson will retain control of its network. The companies said the transition will begin in July, pending regulatory approvals.

"Outsourcing of IT operations is part of Ericsson's ongoing changes within the IS/IT area, and our overall restructuring program aiming at radically reducing the operating expenses and cost of sales," said Per-Arne Sandstrom, deputy chief executive officer at Ericsson.