IBM, Outsourcing, Deal, Australian, Telstra

[SharedXpertise Commentary] IBM earns seven-year outsourcing deal with Australian telecom Telstra

21 Sep 2006 | (News) | SharedXpertise Editor Commentary

For SharedXpertise Commentary, please see below

IBM has signed a seven-year deal to manage Australian telecom Telstra's supply chain services operations. IBM's Supply Chain Managed Business Process Services will provide management and reporting for procurement services including energy, utilities and industrial supplies. Telstra also will have real-time access to capacity, inventory, production, delivery and forecasting.

IBM would not disclose the financial terms of the deal, but a company representative said Telstra will save an estimated $375 million over the seven years.

Telstra will move 60 jobs over to IBM. The company is also expected to eliminate 15 positions from the division. The re-organization is expected to take place primarily in Brisbane and Melbourne-based facilities of the company.

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SharedXpertise Commentary

Since taking charge at Telstra, CEO Sol Trujillo has handed out a slew of fresh outsourcing contracts. Last year, Telstra handed a contract for its mobile phone purchasing to Miami-based Brightstar. This was later extended to a full supply chain management contract.

Telstra has contracted Swedish network maker Ericsson to build its entire $1.1 billion mobile network, although the telco was recently forced to take some work on the project in-house.

IT services company Accenture has been given a contract for a new billing system worth $300 million.

Telstra's recent deals and outsourcing arrangements come in response to Trujillo's promise made last November to return earnings margins to between 50 and 52 percent by 2010 from their present level of 44 percent.

Outsourcing is still in its early stages in Australia, and the region has a particular disdain for offshoring, especially to its neighbors India and the Philippines. Mr. Trujillo made a bold promise when he took over as CEO and is backing up his claims with strategic measures. Although the Australian press is suspicious of outsourcing (as are members of the press in regions throughout the world), it also took pains to note: "While IBM has major BPO centres in India, Telstra spokesman Warwick Ponder said the jobs would stay in Australia."

Author: Commentary, SharedXpertise Editor
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