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Keane To Wind Down Staffing Work For IBM

Because IBM is making internal moves to deploy its own workforce more efficiently, Keane is withdrawing from its $28 million contract with IBM.
Keane Inc. is withdrawing from its $28 million contract to augment staff for IBM.

Keane, a Boston-based IT outsourcing firm with operations in several countries including India and Canada, said its IBM revenue stream will "dissipate" over the next several quarters.

The Wednesday announcement coincides with moves by IBM to shift its employee headcount around more efficiently as it hires additional employees in India, Brazil, and Eastern Europe while it trims staff in the U.S.

The company isn't suffering for lack of new business, however. Earlier this week, Keane announced that its Australian subsidiary landed a $367 million deal to deliver and service a public transit ticketing system for the state of Victoria.

Keane noted that the IBM contract accounted for $40 million in 2004 and is currently running at $28 million annually. The two firms have had a business relationship for more than 25 years.

"With recent developments in IBM's procurement direction, however, we now believe it is in the best interest of Keane and our shareholders to concentrate our financial and personnel resources in areas more aligned with our business strategy," said Keane president and CEO Brian Keane in a statement.

IBM has been working to deploy its workforce more efficiently. IBM's 22,000-employee Professional Marketplace database debuted earlier this year as an instrument to catalog employee expertise and availability. In a Thursday article on the Professional Marketplace, the Wall Street Journal said the tool attempts to track the cost of IBM's huge workforce in the face of fluctuating demand for labor.

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