Shell Outsourcing 3,000 IT Jobs

In a three-part outsourcing deal valued at more than $4 billion, Shell expects to keep layoffs to a minimum.

In one of the biggest outsourcing deals in the last five years, Royal Dutch Shell announced March 31 that it will be farming out its technology and telecommunications infrastructure through three deals valued together at more than $4 billion.

AT&T, T-Systems and EDS were the winners of the five-year contracts, with a $1.6 billion networking and telecommunications piece going to AT&T; a $1 billion hosting and storage deal going to T-Systems, a subsidiary of Deutsche Telekom and a $1 billion computing services and operational integration piece to EDS.

Most of the agreements will go into effect on July 1, when the vast majority of Shell's IT staff will be transferred to the service providers. The company anticipates minimal redundancies.

Shell's IT organization provides IT services to approximately 150,000 users in 100 countries. Of the 3,600 staff and third-party contractors in the outsourced Infrastructure division, which are concentrated in the Netherlands, UK, Malaysia and Houston, 3,000 will be transferred to the suppliers, according to the press release.

The remaining 600 IT infrastructure employers will be retained by Shell.

As part of its $1.6 billion piece, approximately 560 Shell employees will be joining AT&T's worldwide work force of 300,000. About 1,500 of Shell's IT employees will head to EDS as part of their $1 billion deal, and 900 Shell IT professionals will join T-Systems' ranks.

"Partnering with EDS, T-Systems and AT&T gives us greater ability to respond to the growing demands of our businesses. It allows Shell IT to focus on Information Technology that drives competitive position in the oil & gas market, whilst suppliers focus on improving essential IT capability," said Alan Matula, Shell's CIO in a statement.