HP seals US$236M outsourcing deal

Company will manage applications and infrastructure for semiconductor company Avago, from three offshoring centers in Asia.

SINGAPORE--Semiconductor company Avago Technologies has awarded Hewlett-Packard (HP) a US$236 million contract, which will see the IT vendor manage the company's entire IT infrastructure and services.

Under the 10-year agreement, HP will manage Avago's applications, servers, networks, desktops, as well as print and IT helpdesk services.

"With HP's partnership, we designed a strategic outsourcing solution that will enable us to become agile and cost competitive," Eugene Lau, CIO of Avago Technologies, said in a media statement.

"This, along with [HP's] ability to support our aggressive timeline to build our independent Avago IT capabilities, by late summer 2006, sets HP apart from other suppliers," Lau added.

In an interview with ZDNet Asia, Ganesh Ayyar, vice president of managed services at HP Asia-Pacific and Japan, said the IT vendor will manage and support Avago's IT assets from its offshoring centers in India, Malaysia and Singapore. Three-quarters of Avago's global workforce and operations reside in these three Asian countries.

Application development will be undertaken in India, while helpdesk and infrastructure services will be carried out in Malaysia and governance in Singapore, Ayyar said.

"Governance is very critical to outsourcing because what you have today is not exactly what you will need 12 months down the road," he explained. "The ability to be flexible and react to market changes is important."

Employee productivity will also be given a boost, he said, with HP's End-User Workplace Solutions portfolio that includes desktop, imaging and printing, messaging and collaboration and service desk applications.

Avago will also subscribe to HP's leasing and financial asset management services to simplify IT lifecycle management, reduce risk and increase returns on investments.

"Avago is a very progressive company. From the time they were set up, they had decided to outsource," he said.

Avago was spun off from Agilent Technologies last December, and is currently a supplier of semiconductor components to electronics makers worldwide. With 6,500 employees, it is the world's largest privately-held semiconductor. Agilent was itself a spin-off from HP.

Avago still uses some IT resources from Agilent, but decided to develop its own IT capabilities this year, Ayyar said. "They can't be hanging on to Agilent forever," he said.

HP will roll out new IT applications and infrastructure for Avago in the next few months. Specifically, HP will partner Oracle and India's Satyam Computer Services, to implement and support Oracle business applications in areas such as manufacturing, supply chain and sales.

Ayyar said for HP to be successful in deploying outsourcing projects under tight deadlines, the company has to rope in other industry players. "Establishing partnerships is in the DNA of HP," he said.

The deal is certainly not HP's biggest one to date, compared to its US$3 billion outsourcing contract with Procter & Gamble in 2003, Ayyar said. "But in the Asia-Pacific region, this is certainly one of the biggest," he said.

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