Networking equipment supplier Nortel Networks has signed a five-year, $625m business process outsourcing (BPO) contract with consultant PricewaterhouseCoopers (PWC).

The move follows yesterday's announcement by Nortel that it will transfer its circuit board manufacturing and repair facilities and 4200 employees to electronics manufacturer Solectron in a four-year outsourcing deal valued at $10bn.

As a result of the PWC deal, about 1000 of Nortel's corporate services staff will move to new and existing PWC facilities.

Art MacDonald, Nortel's senior vice president of corporate services, said: "This agreement is in line with our business strategy to identify internal activities that are better undertaken with different strategies, such as outsourcing or contracting activities."

Under the terms of the agreement, PWC will manage the day-to-day operations of certain corporate services for Nortel. These include providing legacy system support groups for human resources, non-production purchasing, accounts payable, capital services, employee training, employee expense reimbursement and certain resourcing support functions.

Michael Corbett, president of Michael Corbett & Associates, a global authority on outsourcing, said the move is a prime example of how BPO is reshaping the modern corporation. "It also demonstrates why there is a growing demand for BPO service providers," he said.

The deal is the third in a series of contracts that PWC has signed during the last five months. Earlier this year, the consultant developed a 50 company hub, providing business strategy, design and consulting services to a business-to-business market that will include Pepsi, Proctor & Gamble and Kraft Foods.

PWC also has 100 consultants deployed at General Motors to help the US car giant realign its business for the automotive exchange that it is building with competitors Ford and DaimlerChrysler.