IBM couple with C&W in widely leaked deal

IBM is to manage Cable & Wireless Communications' computers in an outsourcing deal worth $3 billion over ten years and finally agreed yesterday after five months of negotiation. The deal was comprehensively leaked last month. The agreement is said to be the largest ever between a telco (C&W in number two in the UK) and an IT services provider. There will be a transfer of 1,000 staff to IBM Global Services, and it is expected that 400 additional jobs will be created. C&W will retain control of strategy with a small in-house team to manage the relationship with IBM and have the final say on hardware and software choice. IBM's telecommunications industry unit will be setting up an international customer support operation in the UK. The move was characterised as a way of increasing efficiency and service to customers as a result of being able to draw on IBM's resources, rather than to save money. The Communication Workers Union had expressed concern at the outsourcing. Meanwhile, a consortium including AT&T, BT, C&W, Deutsche Telecom, France Telecom, KPN Telecom, MCI, Pacific Gateway, Sprint, Swisscom and Telia agreed a $1.5 billion project yesterday for the TAT-14 640 Gbps fibre-optic cable between Europe and the US. The good news is that 80 per cent of the capacity will be used for the Internet, but it will not be in service before the end of 2000. ®