HP, BT Ink $1.5 Services Deal

The seven-year deal calls for HP and BT Group to offer joint telecom and IT services to enterprises in Europe and prepackaged solutions to SMBs in the UK.

NEW YORK—Hewlett-Packard Co. has signed a $1.5 billion, seven-year services deal with UK-based telecom provider BT Group plc.

The duo starting this summer will roll out joint telecom and IT services to enterprises in Europe and prepackaged solutions to small-to-midsized businesses (SMBs) in the United Kingdom.

"IT and communications are coming together," said HP CEO Carly Fiorina at an event here Tuesday. "Both communications and IT are converging on open, digital technologies that reduce costs and increase agility."

As part of the deal, BT will manage HPs call centers and voice and data network across Europe, the Middle East and Africa; HP, in turn, will manage BTs midrange and desktop IT infrastructure in the UK. Along with this, 290 BT employees will move to HP, and 40 HP employees will move to BT, said HP executive Anne Livermore. These moves, effective July 1, are mostly at the operations level, with some management-level shifts, said Livermore.

Fiorina said this initiative comes in response to customer demand in the UK and EMEA (Europe, Middle East and Asia) regions, but that the Palo Alto, Calif., company could also expand these efforts into the United States. When asked whether HP will pursue similar deals with U.S. telecommunications providers, Fiorina said, "This partnership is not exclusive; we have relationships with other telecommunications companies in the U.S." She said what distinguishes the BT partnership is that its "anchored in mutual outsourcing and building integrated services."

As for whether or not HP edged out other services competitors, such as Electronic Data Systems Corp. or IBM, for this deal, Fiorina only said that "every deals competitive." Livermore later added in an interview that it "wasnt a bake-off."

Wednesdays announcement marks HPs latest move in its push to dominate the IT services industry. Fiorina said the announcement is "proof of HPs global position as a leader in IT services." She also told reporters here that the new partnership is aligned with HPs Adaptive Enterprise utility computing strategy.


Read more about HPs latest moves to propel its Adaptive Enterprise strategy.

BT, for its part, said HP brought needed technological savvy to the table.

"We looked to HP because they have strength in the midrange, desktop—IT areas were not strong in," said Chris North, senior vice president of strategy and business development of BT Global Services. "We have a lot at stake here, with more than 100,000 desktop users in the UK."

Although HP and BT officials would not quantify the exact value of the deal for each company, both said the cost savings will be significant. The deal expands an existing partnership between the two companies.