Electronic Data Systems Corp. and Sabre Inc. have signed a 10-year, $2.2 billion outsourcing contract calling for Sabre to turn over management of its IT infrastructure as well as its outsourcing business for the travel industry.
As part of the deal, Sabre and EDS will jointly market Sabres airline applications through an ASP (application service provider) model. The deal will allow Sabre to focus on growing its travel industry business as EDS takes over its IT operations, according to Jim Dullum, president of EDS global transportation group, in Plano, Texas.
EDS will pay Sabre $150 million for its IT assets and take on 1,200 employees in outsourcing Sabres IT operations. "We will be managing their networks, desktops, applications, maintenance, development, support—a full range of IT services," Dullum said.
At the same time, EDS is acquiring Sabres airline outsourcing business for $520 million. About 3,000 Sabre employees will move to EDS, along with outsourcing contracts with major airlines such as American Airlines Inc. and US Airways Inc. EDS will also take on Sabres data centers and data management assets, including its Tulsa, Okla., data center—"one of the largest real-time data processing facilities in the private sector," Dullum said.
Through the third component of the agreement, EDS will invest $20 million in Sabre to enable its airline operations applications, such as flight operations, system revenue management and so on, as ASPs. EDS will operate the ASP environment, while Sabre will market toward small-to-midsize airlines.
Although Sabre would not name the other competitors that vied for the contract, the travel industry company chose EDS for its "strength in the IT services industry as well as the commitment they made to our employees," said Steve Clampett, senior vice president of software solutions at Sabre Holdings Corp., in Southlake, Texas.