Posted on 6-Oct-2006 10:48
| Filed under: News
Vodafone has selected EDS and IBM to manage its application development and maintenance services in a global IT outsourcing deal, as part of its strategic commitment to reduce costs while leveraging its regional scale.
Vodafone hopes to conclude negotiations and finalise contracts with the two outsourcing partners in the coming weeks.
Under the terms of the proposed arrangements, each outsourcing partner will provide application development and maintenance services for key IT systems to separate groupings of operating companies within the Vodafone Group. 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.
The proposed arrangements form part of Vodafone's cost reduction strategy. Against this backdrop, Vodafone continues to stimulate revenue growth through the roll out of new services and attractive tariffs which encourage customers to use their mobile phones more extensively within the home and office.
The company 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 GBP560 million.
Under the plans, the number of application development and maintenance suppliers currently used by the Group will 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.
Under the proposals, the substantial majority of impacted staff are expected to transfer to the employment of the outsourcing partners, and work from similar locations under similar terms and conditions where possible. The remainder of staff will be retained by Vodafone. The Group is currently in full consultation with staff likely to be impacted by the changes.