BT and HP's outsourcing strategy
$1.5bn strategic alliance
Hewlett-Packard and BT have announced a $1.5bn strategic alliance to address the integrated information and communications technology (ICT) market. BT has already shown much success in winning large outsourcing deals and HP should be able to use the alliance to improve its own position
BT will manage HP's voice and data networks and product support callcentres in Europe, Middle East and Africa (EMEA). HP will manage the desktops and helpdesk for all BT's employees as well as the company's mid-range servers and those of its customers. The deal will run for seven years and the approximate revenue generated of $1.5bn is expected to be split 50/50.
The two companies have already partnered on contracts with Bank of Ireland, the UK National Health Service and a state education deal in Northern Ireland, and will use the deal as the start of a concerted joint attack on the ICT market. The main target will be European enterprises with a global footprint, though the agreement also covers the UK mid-market, consumer and small and medium size businesses.
"Customers clearly need a single point of contact," said Carlo Magistrelli, general manager of HP Services in EMEA. "It can be difficult for customers to tell where the problem is especially if they have mid-range servers spread all over the world - it could be that a server is down, or a problem with the network." He said that the alliance should result in a major European enterprise customer win later this year.
BT already has partnerships in place with other IT outsourcing providers which have helped it win several large UK deals in the last year. It is partnered with Capgemini on the $5.1bn deal it won in December last year with the UK Inland Revenue; with Accenture on a $1.6bn deal to provide services to the UK National Health Service; and with Computer Sciences in a $2.4bn deal with the Royal Mail signed in May 2003.
HP is also looking to win these types of major outsourcing deals. It will have noticed BT's success in this area over the last 12 months, and the partnership should help it to increase its credibility in the European services market.