IBM Announces Three International Agreements

New multiyear deals expand IBM's involvement in large-scale business IT projects to India's Idea Cellular, Sweden's Sony Ericsson and Spain's Endesa. The agreements re-emphasize the role of IBM's Global Services in bolstering the company's bottom line even in the midst of an international downturn.

IBM announced Jan. 29 three multiyear agreements with global corporations to provide infrastructure and IT services on a worldwide scope. The moves could help bolster IBM Global Services, the company's international business consulting and IT management division, whose 2008 revenues of $9.6 billion were down 4 percent from 2007.

An eight-year agreement with Idea Cellular, signed in December, will have IBM assisting the Indian telecom operator in several ways. After helping integrate, migrate and transition applications from Spice Communications (a company recently acquired by Idea Cellular) to the Idea Transformed Applications platform, IBM will manage all operations and services for Idea's service areas in Punjab and Karnataka, and migrate IT help desk services to a centralized help desk based in Pune.

"I think the cellular deal is exceptional," said Charles King, an analyst with Pund-IT Research. "The conventional wisdom is that Indian service companies have been eating IBM's lunch, but they went in there and signed an eight- year agreement."

A contributor toward IBM being able to seal the deal could have been the company's focus on highly replicable services, which require fewer bodies to tackle client problems and allows them to price their services aggressively.

"It'll be interesting to see if this is the first of a series," King said. "India and China have been two places where cellular service has been growing by leaps and bounds, and [IBM] has shown that they can go in and notch a big win."

A five-year agreement with Sony Ericsson, signed in January, will have IBM managing application maintenance and development for all of the company's SAP applications worldwide.

IBM will also provide infrastructure and IT solutions to Endesa, an energy company headquartered in Madrid with interests in Latin America. The contract expands on the two organizations' 2003 agreement to manage Endesa's IT infrastructure in Spain. IBM's mission is to institute a global IT model that promotes operational and energy efficiency while reducing costs, as well as support Endesa's global expansion initiatives.

In addition to managing the central IT platform used by Endesa employees, IBM will manage the control systems behind the company's energy operations.

"Most service deals are at the three- to five-year level," King said. "The length of all three deals really grabbed me."