BAE extends CSC outsourcing deal

Aerospace and defence company BAE Systems has announced it will expand its landmark billion pound outsourcing deal with Computer Sciences Corporation.

Aerospace and defence company BAE Systems has announced it will expand its landmark billion pound outsourcing deal with Computer Sciences Corporation (CSC).

The enlarged agreement will expand the range of services provided by CSC, and will incorporate the UK and US IT operations of Marconi Electronic Systems, which merged with British Aerospace last year to form BAE Systems. Previously, Marconi did not use an outsourcer.

CSC will manage mainframe and midrange computers, servers and desktops as well as helpdesk, applications and internet services. About 1000 staff will transfer from BAE Systems to CSC when the negotiations are completed.

Neither company was prepared to discuss the size of the deal until it is finalised in July.

The expansion builds on the original 10-year outsourcing agreement signed between CSC and British Aerospace in April 1994. At the time, 1650 staff were transferred to CSC in a link-up hailed as a major boost to outsourcing in the UK.

Both companies indicated that they would like to extend the lifetime of the deal beyond 2004. "The agreement is becoming more of a strategic partnership. We will use CSC as a specialist and look towards more innovation," said BAE.

"Extending our partnership with CSC offers improved access to the resources of a global IT company, and means that a larger part of our business will now benefit from the partnership," added Stephen Henwood, BAE Systems' IT director.

The deepening relationship confirms the increasing reliance of large corporations on service providers. Roger Cox, vice president of analysts Gartner, said: "Two to three years ago 80 per cent of outsourcing was tactical. In the future, that will have completely changed around and 80 per cent will be about strategic business needs."

A survey last month by researcher Xephon confirmed that large companies plan to devote more of their IT budget to outsourcing services, despite ongoing concerns over hidden costs.

First appeared in Computing