Marconi has awarded a 10-year IT outsourcing contract to CSC.

California-based CSC will support and manage Marconi’s IT help desk, desktop computing, networking and midrange operations; develop and maintain software applications; and provide telecommunications services.

The agreement encompasses Marconi IT operations worldwide, with the exception of its Asia-Pacific and Middle East regions and its UK-based Interactive Systems business. Ian Williamson, vice president of European business development at CSC, said the agreement might be expanded to cover these operations during the course of the contract.

Some 360 Marconi IT employees will transfer to CSC in June 2003. BT is acting as a subcontractor to CSC and will provide networking services, including local and wide area networking, voice and conferencing services, and global remote access facilities.

The deal is an interesting one, given the outsourcing vendor community’s increased caution about pursuing long-term contracts with clients in volatile markets. There have been several recent examples of outsourcers suffering large revenue and profit shortfalls from contracts that have been terminated prematurely due to the client’s bankruptcy, of which the two highest profile are EDS Corp’s contracts with WorldCom and US Airways.

Marconi returned to the London stock market just last week after a restructuring that saw shareholders in the old Marconi Group end up with just 0.5% of the equity, with the remainder in the hands of the company’s creditors.

CSC has taken steps to ensure that the company gets something out of the deal, even if Marconi’s financial position deteriorates. It is also ensuring that its dealings with the company remain flexible enough to match demand levels if Marconi downsizes. Although Marconi has managed to cut costs substantially, it is battling to keep market share in a shrinking sector. And as economic conditions continue to remain unfavorable, IT vendors increasingly need to protect themselves against the possibility of bad debts.

Source: Computerwire/Datamonitor