IBM Corp, which already boasts the largest services organization in the world, has announced a new worldwide information technology outsourcing alliance with General Electric Co Inc’s GE Capital Services division, in a deal described only as one of the largest agreements of its kind. The GE division will outsource its mainframe and midrange processing for its own businesses to IBM Global Services, and IBM will acquire the commercial data center outsourcing business of the GE division’s TMS Technology Management Services unit. It will manage the data center and network operations for GE Capital Services and its customers as part of the long term deal, beginning by the end of the first quarter. Financial terms were not disclosed. GE Capital Services had revenues of $3.2bn in 1997. The TMS division expanded in 1996 through the $490m acquisition of AmeriData Inc (CI No 2,918), and the acquisition of Germany’s CompuNet Computer AG (CI No 2,947). The majority of TMS employees engaged in service delivery, including those at customer sites, will be transferred to IBM, which will initially provide services facilities for GE facilities in Alpharetta, Georgia, and Toronto, Canada. This isn’t GE’s first sale to IBM – in 1995 IBM acquired GE Capital’s multi-vendor maintenance business for between $50m and $100m (CI No 2,660), and the new agreement extends what the two describe as an already extensive relationship. GE Capital Services says it hopes to realize significant immediate and long-term savings through the deal, and IBM says has committed to increase the quality of service. IBM’s Global Services accounted for $26bn revenues last year – nearly half of total revenues – and is IBM’s fastest growing business.
