HP Signs Services Deal With CIBC

The $1.5 billion deal is HP's largest IT outsourcing contract ever.

Hewlett Packard Co.s services unit this morning announced its largest IT outsourcing contract ever in a $1.5 billion deal with Canadian Imperial Bank of Commerce.

The Palo Alto, Calif., company separately bought out CIBCs half interest in its Intria-HP joint IT services venture.

In its seven-year outsourcing contract with CIBC, HP will provide a range of services covering desktops to mission critical applications—including outsourcing of IBM MVS mainframes and AS/400 minicomputers as well as Sun Microsystems Inc.s servers.

The deal signals HPSs intent to expand its multi-services capabilities beyond HP and Intel platforms. "We need to as a top tier services company address whatever (customers) have in their environments," said HP Services Ann Livermore, executive vice president of the HPS unit. "There is always a variety of technologies in large contracts. These help us expand our skills," she added.

In challenging such top tier outsourcing companies as IBM Global Services and EDS, HP Services will pursue a number of growth strategies.

"You will see us continue to aggressively grow our services business. Well do a lot of things—large deals, aggressive hiring, and youll see us consider other specific acquisitions or joint ventures," she said.

CIBC, a Toronto-based financial services giant, formed the Intria-HP joint venture with HP four years ago. In its strategy to focus on its core banking business, the bank chose to strike an outsourcing deal with HP without going to the market for competitive bids.

"The four years let us trust HP to deliver basic infrastructure services," said Mike Woeller, CIO at CIBC. "We considered the full range of options, from in-sourcing to a full-fledged RFP. We accelerated our process by over a year by not having to go to the marketplace," said Woeller, who added that CIBC evaluated the deal with the help of external benchmarking companies.

As part of its outsourcing contract, HP will acquire 1280 IT professionals, a number of technology assets and two data center sites.

The two firms would not disclose the value of the Intria buyout. Intria also provides IT services for General Motors and Delphi.

Both deals will become effective November 1.