AT&T Wins $600 Million Outsourcing Contract
By: John Spofford
AT&T Solutions (Florham Park, NJ), the carrier's network integration and outsourcing arm, has landed one of the largest information technology (IT) outsourcing deals yet seen. It announced yesterday a 10-year contract valued at about $60 million a year from McDermott International Inc. (New Orleans) for the design, implementation, and management of McDermott's global IT capabilities.
Calling itself an energy services company, McDermott and its subsidiaries manufacture steam-generating equipment, environmental equipment, and products for the US government. It also provides engineering and construction services for industrial, utility, and hydrocarbon processing facilities, and to the offshore oil and natural gas industry. Major business units include J. Ray McDermott (Houston); Babcock & Wilcox (Barberton, OH); and BWX Technologies, with headquarters in Lynchburg, VA.
Expanding a Previous Success
The contract expands an existing relationship that dates to 1995, when AT&T Solutions was awarded a contract to manage the company's wide-area voice and data networking. McDermott was the charter customer of AT&T 's Global Client Support Centers, based in Durham, NC. The company has now assigned AT&T Solutions responsibility for its entire IT infrastructure. The outsourcing contract calls for about 280 McDermott IT employees to join AT&T Solutions.
AT&T Solutions' expanded responsibility includes some 10,000 desktop computers and 350 servers, LANs and wide-area networks (WANs), as well as end-to-end networking management worldwide.
The end-to-end management may have been the key to the win, says Susan Cournoyer, an industry analyst Dataquest. With the increased importance of enterprise networks to the operation of corporations, more network outsourcers, such as AT&T Solutions, are tackling the management of networks as opposed to the more common outsourcing only IT functions such as computing platforms or data centers.
"This is an unusual outsourcing agreement in the extent of the geographies that are being covered by AT&T. [McDermott] really does appear to have global operations ... across 60 countries. [AT&T] is taking a network-centric approach, and it can handle the outsourcing work across these numerous geographies because location ceases to matter as the crucial factor," Cournoyer says.
The credibility of AT&T's numerous partnerships with major carriers worldwide also cemented the deal, she adds. "Although McDermont had a number of other IT service providers providing other types of services, at this point when it renewed the contract it decided to outsource the entire IT infrastructure to AT&T."