HP, Nokia Sign $185M Outsourcing Pact

Hewlett-Packard Co.s outsourcing operation is moving up in the world of big outsourcing deals.

HP yesterday announced it won a $185 million three-year outsourcing contract with Nokia Corp. to take over operation of seven data centers around the globe.

The three-year deal is a proof-point that HPs efforts to take on larger and broader engagements is paying off, according to Susan Nye, marketing director at HP Operations in Mountain View, Calif.

"We were doing smaller, more focused outsourcing deals tied to a new program or application. We decided about 18 to 24 months ago to go after bigger projects," she said.

In its Nokia deal, HP will take on management of seven business operations centers in Finland, the United States, China and Singapore. HP will manage some 3,000 servers—mostly ones from Compaq Computer Corp.—that support a variety of messaging, groupware, and file and print sharing for 60,000 users.

The contract, which goes into effect Nov. 1, also calls for HP to take on about 260 Nokia employees.

HP and Nokia struck a less conventional "joint-sourcing" deal that calls for a transformation of Nokias infrastructure. "We work with them on an open-book policy -- they see our costs, cost targets and margins. We mutually agree on those," Nye said. The contract includes built-in incentives to beat those cost targets, where both sides split the savings. The open-book policy allows HP and Nokia to see how to evolve the environment "cheaper, better, faster," she added.

HPs outsourcing business currently is a roughly $2 billion business.