HP lines up huge outsourcing deals

The company said it plans to manage Procter & Gamble's IT infrastructure, including data centers, desktop and end-user support, and maintenance support for the consumer products giant's operations in 160 countries. The agreement still needs to be made final, but the companies said it will be worth $3 billion over 10 years. The companies expect to reach a definitive agreement in May.

Also Friday, HP said it has signed a memorandum of understanding with Ericsson to provide IT services for the cellular equipment maker's global operations. At this time, the memorandum establishes the principles of how the two companies intend to work together. No financial terms were disclosed for the deal, but the final agreement is expected to be signed before the end of the second quarter.

IT outsourcing deals have been a bright spot in an otherwise listless technology sector. Outsourcing involves businesses contracting with IT companies that assume management of application development or tech support. Market researcher Gartner has predicted that the IT outsourcing marketing in North America alone will rise from $101 billion in 2000 to about $160 billion in 2005. Gartner has also warned that half of IT outsourcing projects will be considered unsuccessful in 2003 because they will not deliver the expected value.

HP competes in this field with companies such as IBM, Electronic Data Systems, Computer Sciences and Accenture. HP's outsourcing unit in recent months has landed big deals with Telecom Italia, satellite television provider DirecTV and automotive supplier Delphi.