Canadian telecommunications equipment giant Nortel Networks announced yesterday that it has signed a seven-year, $US3 billion outsourcing agreement with Computer Sciences Corporation (CSC) to manage the bulk of its internal IT operations.
Under the agreement CSC will provide back-office information technology support, helpdesk, data centre management, legacy application development and support for more than 75,000 desktops worldwide to Nortel's employees.
On October 1 Nortel Networks employees will begin working for CSC's professional services team.
In a statement, Nortel said the outsourcing arrangement would allow the company to focus on developing its Internet business.
Last week, it announced its plans to purchase Web-switching technology firm Alteon Websystems in San Jose for $US7.8 billion in stock.
Though some analysts have questioned the long-term outlook for traditional outsourcing companies that face stiff competition from smaller Internet services firms, Nortel's deal with CSC signals that many big companies are reticent about hooking up with a start-up for long-term outsourcing deals, according to Joshua Randall, an analyst at Kennedy Information Research Group.
"Smaller e-services firms don't have the capabilities to run a seven-year deal, but [they have] more capabilities to do front-end e-business work," he said.