Shell outsources phones and IT in €2.53bn deals

The British and Dutch-owned global oil company, Royal Dutch Shell, has awarded a series of managed services deals worth billions of euros to AT&T, T-Systems and EDS. Almost 3,000 workers - about 1,800 staff and 1,100 contractors - will be transferred to the employ of service providers as part of the deal while T-Systems will relocate its US headquarters to Houston, Texas.

According to the Financial Times, Shell's action was motivated by the pressing need to cut costs in the face of rampant cost inflation in the global oil and gas sector, caused by shortages of staff and equipment. Shell hinted that it expected to save around €317 million (US$500 million) overall this year and that these contracts would be a significant contribution to that total.

AT&T has won a five-year contract valued at €1.01 billion (US$1.6 billion) to manage Shell's networks and communication services, including VOIP, mobile, and remote access services.

As part of the agreement, AT&T will provide managed services in more than 100 countries, and manage relationships with more than 300 third party suppliers, including suppliers of local access connections. AT&T will also take on 560 Shell staff in the Netherlands, Malaysia, the UK and the US.

Shell awarded Deutsche Telekom's T-Systems division, a contract about €1.01 billion (US$1.6 billion) to provide global hosting and storage services to Shell. T-Systems will take over and run Shell's global data centres, including three in the Netherlands, one in Malaysia and one in the US, taking on about 900 Shell staff in the process.

IT services company Electronic Data Systems (EDS) has also won a five-year, €1.01 billion (US$1 billion) contract to provide 'end-user computing services including desktop, service desk, on-site services, back-up and disaster recovery, mobile information protection and managed messaging services," according to a company statement.

BT Global Services also bid for a contract, but was unsuccessful. One pundit, who did not wish to be named, said the BT business unit is struggling to increase its profit margins and make the headway it was supposed to as part of BT's reincarnation a 21st century telco. The failure to win part of the Shell spoils is a considerable blow and will give BT Global Services' CEO, Francois Barrault, some serious pause for thought.