Outsourcing IT Deal
Vodafone Group Plc
02 November 2006
2 November 2006
VODAFONE APPOINTS EDS AND IBM IN GLOBAL IT OUTSOURCING DEAL
Vodafone has today agreed the terms under which EDS and IBM will manage its
application development and maintenance services in a global IT outsourcing
deal. The move forms part of Vodafone's strategic commitment to reduce costs
while leveraging its regional scale.
Vodafone's operating companies in Germany, the UK, Hungary and the Netherlands
will work with EDS as their outsourcing partner. Vodafone's operating companies
in Spain, the Czech Republic, Australia, New Zealand, Portugal, Ireland, Greece,
and, subject to board approval, Italy, will work with IBM as their outsourcing
partner. Each contract is set to run for seven years with Vodafone retaining the
right to bring it to a close earlier if required.
'We are confident that our chosen outsourcing partners will not only deliver
cost savings, but also an enhanced service,' said Steve Pusey, Chief Technology
Officer, for Vodafone Group. 'We look forward to a longstanding and productive
partnership with both of them.'
Each outsourcing partner will provide application development and maintenance
services for key IT systems. Vodafone will retain full strategic control of the
initiative, which focuses on writing code for and maintaining systems such as
billing and Customer Relationship Management applications.
Vodafone expects that the first wave of Vodafone operating companies will begin
to adopt the new arrangements from early 2007, with the others following suit
throughout the rest of 2007.
'We are pleased to have been selected by Vodafone to manage its applications
development and maintenance in Northern Europe,' said Bill Thomas, vice
president and general manager, EDS EMEA. 'By applying our applications expertise
and leveraging our global operations we will assist Vodafone in the delivery of
its strategic commitment to reduce costs while developing new services. We are
committed to delivering an outstanding service.'
'With this agreement, IBM will help Vodafone to focus on its core business,'
says Mike Hill, General Manager, Global Telecommunications Industry for IBM.
'IBM's extensive telecommunications industry knowledge and experience will also
help Vodafone to accelerate its business transformation programme, drive down
costs and increase innovation to deliver competitive advantage.'
As previously announced, Vodafone has identified the potential to reduce unit
costs by 25 to 30 percent within three to five years. Activity levels on
application development and maintenance during the last financial year resulted
in a spend of around £560 million. Under these deals, the number of application
development and maintenance suppliers currently used by the Group is expected to
be rationalised by the two partners, bringing greater economies of scale. The
Group also anticipates that the initiative will result in improvements to the
quality of software produced, as well as greater flexibility, leading to the
faster roll out of more varied services to customers.
- ends-
For further information:
Vodafone Group
Investor Relations Media Relations
Tel: +44 (0) 1635 664447 Tel: +44 (0) 1635 664444
CAUTIONARY STATEMENT
This press release contains 'forward-looking statements' with respect to
Vodafone's anticipated benefits, including anticipated cost savings, from the
global IT outsourcing deal described above. By their nature, they relate to
events and depend on circumstances that will occur in the future. There are a
number of factors that could cause actual results to differ materially from
those expressed or implied by these forward-looking statements. These factors
include, but are not limited to the following: failure by any of the Operating
Companies to conclude negotiations, finalise and enter into contracts with one
or both outsourcing partners; slower than anticipated roll out of the
outsourcing arrangements; failure by the outsourcing partners to perform as
expected under the outsourcing arrangements; changes in the scope of the work
outsourced; slower than anticipated transfer of certain activities to the
partners; changes in the number of staff expected to transfer to the outsourcing
partners; changes in Vodafone's IT systems; higher than anticipated costs to be
incurred by Vodafone under the outsourcing arrangements; and the impact of
exchange rate fluctuations on the cost of the services to the Group.
Furthermore, a review of the reasons why actual results and developments may
differ materially from the expectations disclosed or implied within
forward-looking statements can be found under 'Risk Factors, Trends and
Outlook-Risk Factors' in the Group's Annual Report for the financial year ended
31 March 2006. All subsequent written or oral forward-looking statements
attributable to Vodafone or any member of the Group or persons acting on their
behalf are expressly qualified in their entirety by the factors referred to
above. No assurances can be given that the forward-looking statements in this
document will be realised. Neither Vodafone nor any of its affiliates intends to
update these forward-looking statements.
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