Tuesday, June 12, 2007

Largest Outsourcing Deals of May by Two German Co.s

Source: Globalservicesmedia

The deals were awarded by German retailer KarstadtQuelle and financial-services group Allianz.

In May Germany proved itself as a potential hub of IT-services buyers. The month's two largest IT outsourcing deals were inked by German companies. The largest one was signed between KarstadtQuelle and EDS. KarstadtQuelle, a German retailer, awarded one billion dollars IT-services contract to EDS.

Under the terms of the eight-year outsourcing deal, EDS will control a 74.9% stake in Itellium Systems & Services, a subsidiary of KarstadtQuelle. The retailer will retain the remaining 25.1%. Itellium makes about $190 million in annual revenue, with the majority coming from supporting KarstadtQuelle and its group of retail and consumer goods companies.

As a part of the contract, EDS will establish a retail-focused service center to support KarstadtQuelle, handling application development and maintenance for KarstadtQuelle's department stores and online businesses, plus managing and supporting desktops, laptops, PDAs and printers. In addition, EDS will manage third-party contracts for KarstadtQuelle's infrastructure, including its retail network.

KarstadtQuelle plans to save approximately $884 million over the course of the contract. The company's outsourcing agreement with Atos Origin is still in place. This agreement was signed in 2004 to handle infrastructure and network operations.

The second largest deal of May was signed by Germany 's financial-services, Allianz. Allianz signed a five-year outsourcing contract with Fujitsu Services. The contract is Fujitsu's biggest-ever contract in Germany .

The $544 million IT-services deal entails managing desktop, network, and telecom services. Under the deal, Fujitsu will supply, install, support and maintain these services for Allianz's internal IT-services division AGIS. The latter will retain overall responsibility for projects, billing and engineering.

This contract gave further justification to Fujitsu's $108 million takeover of German SAP services provider TDS at the end of 2006, which significantly increased its scale in the country. Fujitsu's commitment to grow its German business was a factor for its selection as its main concern was the prospects of the transferred staff, according to Allianz.