T-Systems, the IT services operation of Deutsche Telekom AG has secured a 1.3 billion euro – $1.6 billion – outsourcing deal with Deutsche Post, in what represents one of the largest IT services contracts ever signed in Germany.
The new contract extends an existing deal from 2000, and will see T-Systems supply and support some 55,000 PCs to German post offices over the next five years.
German companies have traditionally adopted a cautious approach towards outsourcing, with companies such as Lufthansa, BMW and BASF preferring to build up large internal IT services divisions. However, there are signs that the tough economic climate in the country over the last three years has forced many companies towards outsourcing as a way of reducing operating costs.
Deutsche Bank announced a $2.5 billion deal with IBM Global Services in December 2002 to outsource its computer centers in continental Europe, and the vendor has also won $1 billion deals with chemicals manufacturer MG Technologies and electronics giant Siemens AG.
Last week, Paris-based vendor Atos Origin SA signed its largest-ever single outsourcing win with KarlstadtQuelle, which will see it take on 900 employees from the German retail giant’s IT department. T-Systems is also enjoying growing success in its domestic outsourcing market. Last month it announced a $612 million deal with bank Volks und Raiffeisenbanken to take over the operation of its data network.
There has been a spate of major outsourcing initiatives announced by postal services around the world, as the sector becomes increasingly deregulated and national incumbents look to drive greater efficiencies in their infrastructure in the face of greater competition.
The UK Post Office awarded a $1.1 billion contract to a consortium led by Fujitsu Services in January 2003 to develop and integrate an infrastructure for an electronic banking service, and in May 2003, it awarded a $2.4 billion IT outsourcing deal to a CSC-led consortium which saw 1,735 IT employees transfer to the vendor.
Swedish postal service Posten outsourced its IT infrastructure, along with 180 staff, to IBM Global Services in a $250 million deal announced in June 2003. Canada Post rolled its internal IT operations into a joint venture company with CGI Group Inc. in May 2002, as part of a 10-year, CAD 3.5 billion ($2.7 billion) outsourcing deal.