Home » News » Mobile-PDA » Vodafone selects two preferred suppliers in global outsourcing deal
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
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.
Today's announcement is the result of a rigorous eight-month selection
process, which has reduced the number of candidates from 11 to two
preferred outsourcing partners, subject to final contract. Candidates
were assessed against a wide range of criteria including technical
capability, outsourcing expertise, cost and cultural fit to ensure the
future success of the partnership.
As previously announced, Vodafone 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
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.
Arun Sarin, Chief Executive of Vodafone, said: "This initiative is a
good example of how Vodafone is finding new ways to deliver greater
cost efficiencies across the business. We are exploring the possibility
of outsourcing other non-core activities so that we can focus on our
"The outsourcing of this application development and maintenance work
complements a series of other projects designed to reduce Group
overheads including the regional consolidation of data centres and the
centralisation of network supply chain management."