During 2005, major contracts were awarded to providers, including EDS Corp., IBM Global Services and Lockheed Martin. The number of contracts with a value of $1billion or more, fell to 17 during 2005, in comparison to 25 in 2004 and 29 in 2003. Half of the ten largest deals in 2005 involved an element of multisourcing. Many customers today have had prior experience of earlier generations of outsourcing deals, and are no longer convinced that they will get the best possible service by handing over the keys to the IT department of a single, high-profile supplier.
The increasing crossover between telcommunications and IT-services’ companies was another notable trend during the last year, due to the increasing importance of high-speed networks in delivering applications and computing power. Telecom operators, including Bell Canada, MCI, Telstra, Belgacom and New Zealand Telecom, have made recent moves to buy IT-services’ contractors.
Two of the top ten deals were BPO contracts, whereby the supplier took over the day-to-day running of back-office administrative functions, as well as the underpinning IT systems.
Perhaps the most interesting deal was that signed by the Dutch financial-services company — ABN AMRO with IBM Global Services, as it formed a part of one of the most radical overhauls of IT-sourcing strategies ever seen. The bank handed over its desktop and server-management functions to IBM, but decided to use four other suppliers to source its applications maintenance and development services, including three of India’s largest software-services companies — Tata Consultancy Services, Infosys Technologies and Patni Computer Systems.
EDS Corp. cpatured the two largest contracts tracked during 2005, with the wins being in the vendor’s favorite hunting grounds — the U.K. government sector. A contract extension with the Department of Work and Pensions, and a new deal to manage the modernization of the IT infrastructure in the Armed Forces of U.K., clearly indicated that it had won back customer credibility, after having suffered high-profile financial problems over the last three years.
