August is historically the quietest month of the year in terms of major IT services and BPO contract signings, but some interesting deals were signed in late summer this year, despite the distractions of the vacation season.

The ten largest contracts tracked included three major contract extensions, the largest of which was HP’s four-year, $700-million extension with Canadian bank, CIBC.

CIBC and HP signed an initial seven-year agreement in 2002 that transferred the bank’s enterprise services to HP, including support for online banking, branch tellers, automated banking machines, wires and fraud detection systems. HP also handles data center duties, network infrastructure, application services, storage and messaging. CIBC retained the management of its desktop support, helpdesk and certain network services. The extension takes their relationship through 2013 and puts the total remaining contract value at $1.2 billion.

Meanwhile, EDS announced a five-year, $150-million extension of its applications and infrastructure services contract with the Dollar Thrifty Automotive Group. The contract starts in October, and covers applications development and maintenance, as well as services for network, storage, backup and recovery and midrange hosting, according to an EDS statement. EDS will manage more than 4,500 desktops and 500 servers. The company has been handling parts of Dollar Thrifty’s data center operations for the past nine years.

U.K. business process outsourcing provider, Xchanging, continued its resurgent run of form by announcing a deal worth $434 million with insurance company, Aon, to supply claims processing and administration services. Xchanging said the 10-year contract would involve taking on 500 of Aon’s U.K.-based employees.

But perhaps the most interesting deal announced in August was of Chinese software-services firm, Chinasoft International, securing a five-year applications-services framework agreement with Microsoft, with a ceiling value of $86 million. The contract formalizes the relationship between the two companies, which have worked together in the past on a project-to-project basis.

Chinasoft increased its headcount to 1,676 staff at the end of June from just 493 a year ago, as it built scale in its software-outsourcing business through several acquisitions, and set up its first operations in the U.S.A., with offices in the Silicon Valley, Washington state and New Jersey.

Each year of the new agreement with Microsoft has an annual revenue cap, which increases over the course of the deal from $7.2 million in the year ending December 2006, rising to $20.2 million in 2011. Chinasoft’s contract win with Microsoft marks a big success for a Chinese provider, as one of the reasons cited for China finding it difficult to close the gap on India is that there are no indigenous software-services suppliers of a comparable size to the larger Indian players. This obviously makes it harder for them to bid for big deals.

THE TEN LARGEST IT SERVICES DEALS IN AUGUST 2006
Rank	Customer	Provider	Engagement	Region	Value ($ million)	Duration (In years)
1	CIBC	HP	Infrastructure management, applications management	Canada	700	4
2	Aon	Xchanging	Business process outsourcing, processing services	U.K.	437	10
3	U.S. Army	AT&T	Network management	U.S.A.	250	10
4	Dollar Thrifty Automotive Group	EDS	Applications development and support, applications maintenance	U.S.A.	150	5
5	Safmarine Container Lines	IBM Global Services	Data center management, infrastructure management	South Africa	148	10
6	Dept. of Agriculture	SAIC	Infrastructure management, applications management	U.S.A.	121	5
7	General Services Admin.	BearingPoint	Applications development and support, consulting, systems integration	U.S.A.	105	5
8	Bharti Airtel	IBM Global Services	Applications development and support, systems integration	India	100	5
9	U.S. Navy	CACI	Network integration, systems integration	U.S.A.	96.4	5
10	Microsoft	Chinasoft International	Offshore contracting, applications development and support	China	86	5
DATAMONITOR’S IT-SERVICES CONTRACT TRACKER LOGS EVERY PUBLICLY DISCLOSED CONSULTING, SYSTEMS INTEGRATION AND OUTSOURCING DEAL, WITH A MINIMUM VALUE OF $1 MILLION