Korean Air Outsources Tech Ops To IBM

Korean Air has signed a ten-year tech services agreement with IBM under which the airline will hand off its data center operations to the Armonk, NY-based computing giant. The pact renews an existing outsourcing deal between the two companies.

"The new outsourcing services contract with Korean Air marks a turning point in the history of IT outsourcing in Korea as we will extend beyond the current services and focus on providing outsourcing services that can enhance the business value of Korean Air," said IBM Korea general manager Wong-jon Kim, in a statement.

As part of the arrangement, IBM will provide application lifecycle management services that aim to modernize Korean Air's software environment and implement a services-oriented architecture for the airline. SOA footprints allow businesses to reuse code and lower application development costs.

"We have high expectations that IBM Korea will continue to deliver IT services designed to improve the business value of Korean Air, through reliable operations management," said Sang-man Lee, Korean Air's CIO, also in a statement.

IBM's tech services unit saw revenues increase 8% year-over-year to $9.9 billion in the most recent quarter. The group, along with other U.S.-based outsourcers, stands to benefit from an accounting scandal at a major, India-based competitor.

Last week, Satyam chairman Ramalinga Raju admitted falsifying profits by as much as $1 billion. Observers say the admission could cause some businesses to pull outsourcing work from Indian firms and steer more contracts to American vendors such as IBM, HP, and CSC.

Raju has since been arrested and is facing a number of charges. Satyam has also been hit with several investor lawsuits.