IBM Seen Snatching BPO Pact with P&G

IBM has entered into exclusive negotiations to finalize a business
process outsourcing (BPO) contract with consumer products maker Proctor and
Gamble , an IBM spokesman confirmed Thursday.

James Sciales of IBM told internetnews.com that P&G is in
exclusive talks with Big Blue’s Global Services division on a contract for IBM to
take over management of P&G’s employee services activities. The two sides
hope to have a long-term deal formalized over the next several weeks,
Sciales said.

A spokesman for P&G was not immediately available for comment. Details on
the potential size of the contract, or how many years it would be slated to
run, were not released but published accounts suggested the multi-year deal
could be valued around $500 million.

When it is finalized, the deal could potentially serve as something of a
rejoinder to IBM’s systems rival Hewlett-Packard , which
recently won a coveted $3 billion, 10-year IT outsourcing contract from P&G.

HP’s deal calls for it to manage the company’s IT infrastructure, data
center operations, desktop and end-user support, network management and some
applications development and maintenance support for P&G’s global operations
in 160 countries.

In IBM’s case, Big Blue would be actually managing processes from the
company’s employee services division, such as compensation, administration
of benefits or payroll.

Analysts that cover outsourcing call BPO a hot growth in the IT industry,
in part because companies are increasingly moving to outsource whole
business operations, even processes that were once viewed too sacrosanct to
offload to an IT outsourcer.

P&G’s moves to outsource much of its IT operations is being closely
watched by the IT sector as a bellwether customer. EDS once came close to
snagging a back-office, multi-year outsourcing contract from P&G worth an
estimated $7 billion. But P&G instead decided to break the contract into
pieces, including this one, the HP deal and two others.

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