Within the next five years, Vodafone expects to save £150m annually by outsourcing some of its software development and maintenance to EDS and IBM.
As part of the global outsourcing deal the IT suppliers will each provide services to separate groups of operating companies in the Vodafone group.
A spokesman says the mobile phone company expects to finalise the contracts, including how much of its £560m annual spend on applications development and maintenance will be outsourced, in the next few weeks.
‘The contract is for the writing of code for key applications, such as billing, sales and our customer relationship management software,’ he said.
‘We will retain the strategic elements, including architectural design. We expect improved flexibility and agility and product performance.’
Cost savings are expected through improved productivity and supplier rationalisation. No compulsory redundancies are expected for the 1,000 UK staff affected, with most transferring to the outsourcers.
The deal is part of a drive to cut IT costs, which includes consolidation of data centres and centralising logistics systems.
Ovum analyst Eirwen Nichols says the deal has been a long time coming, indicating the scale of internal challenges. ‘Vodafone’s drive to cut operating costs across the group was announced in 2004, but has proceeded slowly in the face of resistance from the operating groups,’ he said.
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