IBM Confirms Sunoco Outsourcing Deal

IBM confirmed Thursday that it signed a deal to provide outsourced tech and back office services to petrochemical giant Sunoco.

The deal, first reported August 6 by InformationWeeek, will see IBM provide Sunoco with a number of business process services and application support services. Financial terms were not disclosed.

"We're pleased to partner with IBM on this initiative," said Sunoco chief financial officer Brian MacDonald, in a statement. "This arrangement marks another important step in Sunoco's continued expense reduction program, which is critical to improving the company's competitiveness," said MacDonald.

Under the pact, IBM will provide Sunoco with application enhancement, application maintenance, finance and accounting, and procurement services from operation centers around the world.

"IBM and Sunoco are working together to identify and implement cost-effective solutions in Corporate, Marketing, and Refining Operations functions utilizing leading practices and IBM innovation across all components of the petroleum industry," said Rick Rosso, VP for Managed Business Process Services at IBM, in a statement.

"Our partnership is focused on delivering business process optimization and application services on a global basis in order to help Sunoco gain improved efficiencies through a more variable-cost business model, drive market differentiation and improve their operational excellence," said Rosso.

Sunoco last year spent about $90 million on IT and employs roughly 250 tech personnel under CIO Peter Whatnell. It was not immediately clear how many of those workers would be affected by the deal.

Sunoco last year signed a four-year, $34 million contract extension with India-based Wipro's Infocrossing unit. Under that deal, Infocrossing is to continue managing Sunoco's UNIX, Windows, and IBM mainframe environments while providing storage services.

Sunoco also works with AT&T Services and CompuCom. The company hired consulting firm EquaTerra earlier this year to identify other areas that might be ripe for outsourcing.

Sunoco is in the midst of a shakeup. In July it posted second-quarter profit of $145 million, after losing $55 million during the same period a year ago. Going forward, it's looking to further boost profits by focusing more on oil retailing and logistics. To that end, it's announced plans to spin-off its Sun Coke Energy refining unit next year.

Sunoco employs about 10,000 workers in the U.S., with about 4,000 of those in the Philadelphia area.