Marconi in £450m outsourcing deal

Troubled telecoms company Marconi is outsourcing its IT to Computer Sciences (CSC) in a £450m pay-as-you-use contract.

The 10-year deal will see 360 Marconi IT staff transfer to CSC this month, and a further 40 will move to BT, a subcontractor providing network services.

One of the main objectives for outsourcing is to allow Marconi to adapt its requirements and costs to meet the changing needs of the business, says executive vice president for business systems Fiona Robinson.

She says the lesson was learned the hard way after the company was forced into a major financial restructuring last year as a result of the telecoms industry slump.

'Our fixed costs were very fixed at a time when we needed them to be variable,' she told Computing.

'We needed to scale down IT to match the scaling down of the business. When the market scales back up, we would struggle to scale back up again.'

The contract with CSC is based upon a pay-per-use agreement measured by business capacity that can grow and shrink as the company changes.

'It is not transaction based, the charges are linked to the size of Marconi's business,' said Robinson.

'We have agreed mechanisms to govern how costs change, based upon things like the number of staff, network capacity or the number of sites we have. We also hope to achieve further cost reductions.'

Marconi has been considering outsourcing for over a year, but was forced to postpone plans until the financial restructuring was completed last month. But Robinson says IT remains vital to the company.

'The business recognises that IT has an important role to play in its long and short term future,' she said.

CSC will manage Marconi's IT help desk, desktop computers, networking and mid-range systems, develop and maintain software applications and provide telecoms services.

(Blob) CSC also announced two other deals last week - a $450m, a 10-year outsourcing agreement with facilities management company ISS, and a five-year, $17m deal to implement CAMS II, CSC's merchant acquiring and card issuing software.