C&W Optus discusses terms with IBM Australia

Cable & Wireless Optus (C&W Optus) is considering outsourcing elements of its information technology to IBM Australia in a deal rumoured to be worth hundreds of millions of dollars.

The telecommunications specialist confirmed this week it was negotiating an outsourcing deal with IBM Australia, but declined to provide any further details. A spokeswoman confirmed the negotiations were taking place with IBM Australia, not IBM Global Services Australia, the outsourcing specialist in which Optus' bitter rival Telstra holds a 26 per cent stake.

One industry source told ComputerWorld that IBM Australia's negotiations with Optus C&W involve work on "the applications side" of C&W Optus' business.

The move comes after C&W Optus stated in its prospectus, that "C&W Optus resources are currently constrained as significant resources have been absorbed by C&W Optus' year 2000 compliance program and software development for local telephony""There is a risk that there will be insufficient IT resources to support new product development and system improvements that are integral to C&W Optus' overall business strategy".

C&W Optus would not be the first member of the Cable and Wireless clan to take the outsourcing plunge with IBM.

Back in September 1998 British telecommunications and cable TV provider, Cable & Wireless Communications (CWC), based in London, inked a $US3bn 10-year outsourcing deal with IBM in which the service provider took over management of the company's entire IT infrastructure and international customer support.

IBM now manages CWC's PCs, servers, and other hardware, customer support, implementation of software, and hardware installations aimed at offering new services in areas such as telephony, digital TV and Internet access.

According to a CWC spokesman the aim of the deal is to offer better customer services such as unified billing for dual phone lines and digital TV services.

In that deal, CWC retains responsibility for its IT strategy and will continue to run its systems security, switched network infrastructure and in-house communications network.

C&W Optus is no stranger to outsourcing.

Earlier this year, C&W Optus signed a multimillion outsourcing deal with Digital (now Compaq) which encompassed the organisation's desktop environment, production development support and help desks.

Compaq has stated that any deal C&W Optus strikes with IBM will not affect the scope of Compaq's outsourcing contract with C&W Optus.

And in July 97 C&W Optus signed a deal with EDS for installation of a new billing system to provide integrated single billing across its telecommunications, entertainment and information services.