Seeking Savings, Sprint Turns to IBM

Seeking savings as its wireline telecom business slips, Sprint has awarded five-year, multi-billion-dollar call center outsourcing contract to IBM .

Big Blue will manage several Sprint call centers with a goal of reducing call times and increasing the number of queries handled by automated phone and Web self-help systems.

As part of the overhaul, the carrier’s Dallas center, which serves long-distance customers, will be consolidated into an existing facility in Fort Worth, Texas.

All told, the arrangements are expected to save the Overland Park, Kan., telecom about $550 million over three years.

IBM spokesman Matt McMahon said about 168 Sprint managers in Kansas City will be offered jobs. Nearly all 1,100 at Sprint’s Nashville call center will be hired by Convergys , an IBM subcontractor that will operate the center for the next five years.

In addition to the customer services agreement, the Armonk, N.Y.-based IBM and Sprint inked additional technology and marketing pacts. For example, IBM will incorporate Sprint’s national PCS wireless services into customized on-demand offerings for enterprise customers.

And Sprint will adopt IBM’s Service Provider Delivery Environment (SPDE), an open-standards architecture that helps telecoms introduce new voice, text and Internet-based services to their subscribers.

The adoption will make Sprint the first U.S.-based telecommunications provider to adopt SPDE on a large scale. Sprint is investing nearly $100 million in the project.

The outsourcing deal comes as Sprint tries to shore up its balance sheet. At its annual analyst conference this morning, the company said it expects its wireless unit to grow faster than expected in 2004, but gains will be partially offset by lagging wireline business.

Many carriers are looking to cut costs and simplify corporate structures by outsourcing call centers. But it’s not the only work wireline and mobile companies are moving out. Under a five-year, $248 million contract, IBM handles Nokia’s help desk and desktop IT operations.

IBM competes with Hewlett-Packard , Electronic Data Systems and others for outsourcing business in the telecom sector. And the deals aren’t always exclusive.

Yesterday, HP said it won a five-year extension with Nokia to manage IT infrastructure and operations.

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