Sprint Rethinks Outsourcing, Pulls Some Work Back - InformationWeek

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Sprint Rethinks Outsourcing, Pulls Some Work Back

Wireless and long-distance services provider Sprint Nextel is quietly pulling back some of the IT work it outsourced to IBM two years ago under a $400 million deal and also is reviewing a multibillion-dollar customer-service support contract it holds with the company.

Sprint Nextel has signed a revised agreement but hasn't publicly disclosed it, a spokesman says. The contracts in question were signed before the merger last year of Sprint and Nextel Communications.

Sprint also is rehiring a number of tech workers--as many as 400--that were "rebadged" to IBM under a technology outsourcing deal signed in 2004, according to an IBM insider. "The Sprint workers who were sold to IBM two years ago and went through job cuts and offshoring are now going back to Sprint," says the source, who has knowledge of the discussions between Sprint and IBM.

Sprint outsourced application development, maintenance, and related IT work to IBM under the $400 million deal. Sprint's CIO at the time, Michael Stout, heralded the agreement as a way for Sprint to "focus on areas of growth and innovation." That same year, Sprint handed much of its call-center-based customer support to IBM under a "multibillion-dollar" agreement that transferred about 4,500 call-center workers to IBM.

Sprint Nextel CIO LeFave wants outsourcing done his way.

Sprint Nextel CIO LeFave wants outsourcing done his way.
The top tech job at Sprint Nextel is held by CIO Richard LeFave, who comes from Nextel; the IBM contracts were let by former Sprint CIO Stout, who's no longer with the company. It's not unheard of for CIOs to rework contracts inherited through a merger. Former Bank One CIO Austin Adams terminated a $5 billion outsourcing deal between JPMorgan Chase and IBM after Bank One and Chase merged in 2004 and Adams became CIO of the combined companies.

LeFave wasn't available for comment. In an E-mail, a Sprint Nextel spokesman says IBM will continue to handle some application development and maintenance work for the company. It's unclear which specific IT tasks are moving back to Sprint Nextel, but the company will "retain full application ownership, including full life-cycle management, architecture, system analysis, and design," the E-mail said.

As for the call-center contract, which is significantly larger than the IT-services deal, the spokesman said, "Sprint Nextel is in the final stages of amending existing agreements with IBM for support of Sprint Nextel's customer-care services."

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