July’s biggest outsourcing contract was the $1,400 million deal between AstraZeneca and IBM Global Services. The outsourcing relationship between the two was renewed for the next seven years.

The contract expands on a relationship that began in February 2001 when the pharmaceutical giant AstraZeneca awarded IBM a deal worth $1,700 million over seven years to provide desktop and network-management services across 45 countries. The new contract will see IBM providing a broader range of services in more countries, but for a lower annual rate than the original deal.

Under the terms of this renewed contract, IBM will provide infrastructure-management services to AstraZeneca operations in 60 countries worldwide. The agreement covers a range of IT functions including server and storage hosting, desktop management, IT support and network management.

In July Gruppo Monte Paschi Siena also awarded a big deal to IBM. The $354 million deal extends a previous deal signed in 2003 worth $571 million. IBM said its work with the bank will now move beyond traditional IT services and into the management of business process and an improved architecture. Monte Paschi Siena expects to save $65 million over the six-year term of the deal.

In the same time frame, Royal Philips Electronics and Infosys Technologies signed an outsourcing contract worth $250 million for seven years. As a part of the deal, Infosys will take on the responsibility for handling Philips’ finance and accounting (F&A) functions and the processing of its purchasing orders over the next seven years.

In addition, Infosys will spend $28 million on acquiring Philips’ internal F&A division, which includes 1,400 employees based at delivery centers in India (which houses 445 of the Philips team), Poland (765) and Thailand (190). The contract is a significant one for Infosys and for the BPO sector as a whole. For the provider, the contract is its largest single success in the F&A space to date, and it makes the company one of the five largest F&A outsourcers worldwide, alongside Accenture, IBM, Genpact and Capgemini.

The Commonwealth Bank of Australia has extended its desktop management deal with EDS that acknowledged this new deal represents a “significant revamp” of its existing relationship with the bank. The company believes that a growing number of outsourcing customers are taking advantage of the expiration of first-generation deals they signed in the late 90s to negotiate more flexible and focused deals with incumbent suppliers.

The two companies initially engaged in 1997 in a $3,000 million, 10-year deal, which at the time was the largest outsourcing contract ever signed in the banking sector. Three years later, EDS was awarded with an additional $700 million deal to manage the IT integration that took place when Commonwealth merged with local rival Colonial.

The Ten Largest IT Services Deals in July 2007

Customer	Provider	Engagement	Region	Value ($ mn)	Duration (in yrs)
Astra Zeneca	IBM Global Services	Desktop management, server mgmt., helpdesk mgmt.	U.K.	1,400	7
NASA	CSC	Application development and support, application mgmt.	U.S.	597	10
Gruppo Monte Paschi Siena	IBM Global Services	Application mgmt., consulting, infrastructure mgmt.	Italy	354	6
Commonwealth Bank of Australia	EDS	Desktop mgmt., infrastructure mgmt, support	Australia	310	5
U.S. Army	Stanley Associates	Infrastructure mgmt., maintenance	U.S.	267	5
Royal Philips Electronics	Infosys Technologies	Business process outsourcing, offshore contracting, BPO finance and accounting	Neths	250	7
U.S. Army	STG	Application mgmt., Infrastructure mgmt., support	U.S.	190	5
U.S. Navy	Stanley Associates	Application development and support, consulting	U.S.	115	5
Department of State	CACI International	Business continuity/disaster recovery, desktop mgmt.	U.S.	100	5
Centers for Medicare and Medicaid	CSC	Application development and support, application mgmt.	U.S.	96	2.5 (approx.)

Source: Datamonitor