IBM Closes Major Outsourcing Deal With Visteon

IBM is taking over the operations of auto parts
manufacturer Visteon .

By taking over operations, IBM is likely to bring more than $2 billion in
outsourcing contracts over the next ten years. Details of the deal between
Visteon and IBM were announced Wednesday and amount to one of IBM’s largest
outsourcing contracts.

Visteon was spun off by Ford Motor Company back in 2000 and
has been attempting to diversify away from dependence on the automaker.
Through the deal, Visteon will now move away from using Ford’s computer
system and shift to an outsourcing arrangement with IBM.

As part of the IBM-Visteon outsourcing contract, IBM will assume control
over Visteon’s existing data centers and help desk systems. Some Visteon
information technology professionals will be transferred to IBM, and
significant layoffs are not expected.

IBM has decided that outsourcing is a major source of growth for the
company, and it is marketing the company as one of the premier information
technology outsourcing contractors in the world. Recently, IBM has one
several multibillion dollar outsourcing contracts from major companies,
including J.P. Morgan Chase estimated to be worth $5
billion over the next seven years.

By outsourcing IT management to IBM, Visteon is lowering its investment
costs in technology, which enable it to focus on its core business. IBM has
decided to make a major push in the outsourcing market for services and
consulting. In 2002, IBM’s services divisions brought in more than $36
billion in revenue, or nearly half of the company’s total sales.

Visteon’s decision to go with IBM for its global services partnership will
in its words “bolster its long-term growth and profitability.”

As part of the deal, IBM will provide a variety of IT services globally,
including “mainframe support services, data centers, customer supports
centers, applications development and maintenance, data network management,
desktop support and disaster recovery.” Visteon provides technology
solutions to the global automotive aftermarket and has more than
77,000 employees located in 25 countries around the world.

A recent survey published in late January by Dataquest, a unit of
Gartner , said that offshore application management was
ranked by 36 outsourcing vendors as the highest growth service opportunity
in 2003.

The Dataquest outsourcing survey went onto say that by the end of
2002, IBM won seven of the fourteen major outsourcing deals. Computer
Sciences Corp. won one and Electronic Data Systems won two major deals, falling far behind IBM’s dominance in the
global outsourcing deal market.

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