Sun Microsystems this week said it will outsource its internal information technology team to Computer Sciences Corp. in a contract worth US$360 million.
Sun says it will save US$100 million over the next five years with the move. CSC says it will provide software and support for a variety of Sun's internal business activities, such as finance, manufacturing, messaging, enterprise management, customer relations and data warehousing.
The Mercury News reports that some employees at the company will be "badge flipping," meaning they will continue to work at Sun's facilities but will be employed by CSC. Sun says the moves are part of its overall goal to reduce spending by US$500 million by July 2006. A report issued by The Goldman Sachs Group says Sun could ultimately contract out up to 45 percent of its workforce. Sun says it currently has 32,000 employees worldwide.
Sun recently reported revenue of US$2.84 billion and earnings of US$0.01 per share. Revenue declined by 1.6 percent from the US$2.89 billion generated during the company's 2004 second quarter. The company's revenue has failed to grow more than 1 percent for 15 consecutive quarters, according to a report released by analyst firm Sanford C. Bernstein & Co.