CWC and IBM sign pounds 1.8bn IT contract

CABLE & WIRELESS Communications yesterday linked up with IBM in a pounds 1.8bn 10-year deal which will see the computer giant take over 1,000 of the cable group's employees, writes Peter Thal Larsen.

Under the terms of the agreement, believed to be the largest outsourcing deal ever in the UK, IBM will take responsibility for designing, running and supporting CWC's internal computer systems.

CWC will retain control of the software that runs its telecommunications network, and continue to devise its IT strategy.

The deal breaks new ground in the telecoms sector, where companies have traditionally guarded their IT systems jealously. Graham Wallace, CWC's chief executive, said the move was not designed to cut costs: "IBM is clearly able to deliver IT at lower unit costs than we could on our own," he said. "But over the next 10 years we will be spending what we would have spent anyway."

Mr Wallace added that there would be no redundancies among CWC staff. Indeed, IBM plans to create another 400 UK jobs to cope with the work.

Chris Godsmark, telecoms analyst at Henderson Crosthwaite, said: "This gives CWC the potential to have a world-class IT platform with much better potential to identify its customer base as it begins to roll out digital television."