Shell signs $4 billion deal to outsource IT jobs

by Editor 4/1/2008 4:38:00 PM

Royal Dutch Shell is set to outsource 3,000 IT jobs – both Shell's IT staff and contractors. The company announced yesterday that it will outsource its technology and telecommunications infrastructure by signing three deals. The combined value of the deals is estimated at more than four billion U.S. dollars.

The companies that won the five-year contracts are telecommunications services provider AT&T, Frankfurt-based information technology company T-Systems, a subsidiary of Deutsche Telekom, and global IT services provider Electronic Data Systems (EDS).

AT&T will be in charge of networking and telecommunications, T-Systems will deal with the hosting and storage, while EDS will be responsible for operational integration.

The agreements go into effect in July, when most of Shell’s IT staff and contractors will be moved to the service providers. The infrastructure division, on the other hand, will be transferred to the suppliers. Shell will keep the remaining 600 IT infrastructure employers.

According to the plan, about 560 Shell employees will be transferred to AT&T, 1,500 IT employees will leave for EDS and 900 IT experts will be joining T-Systems. Shell predicts that the number of layoffs will be minimal, "20-30 redundancies" at worst.

The oil company’s information technology organization offers IT services to 150,000 clients in 100 countries worldwide. Shell’s chief information officer Alan Matula issued the following statement following the signing of the deal:

"Partnering with EDS, T-Systems and AT&T gives us greater ability to respond to the growing demands of our businesses. It allows Shell IT to focus on Information Technology that drives competitive position in the oil & gas market, whilst suppliers focus on improving essential IT capability." 

Shell’s Global IT Infrastructure and Services vice-president Swee-Chen Goh said:

"We want to look for value out of this, coming from an improved ability to focus on what drives IT in our business and access to know-how and resources in this industry. We have built the foundation blocks for success and assuming we achieve our goals there is no reason why we would not continue with the arrangement."

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