Vodafone outsources application development

Vodafone is to outsource the bulk of its application development and maintenance to EDS and IBM, in a move to cut costs.

The UK-based operator group has announced that application work for its local operators in the UK, Germany and the Netherlands will be transferred to EDS, while IBM will handle work for Spain, Portugal the Czech Republic, Australia, New Zealand, Ireland, Greece and — subject to board approval — Italy.

"It just makes more sense to centralise all of that work to those specialists," a spokesperson for Vodafone told ZDNet UK on Thursday. "If we need to put out a new customer proposition, the code needed to do that will be managed in terms of services by those companies."

The spokesperson said that the "vast majority" of Vodafone's application development and maintenance staff would transfer over to EDS and IBM, and said no compulsory redundancies were expected as a result of the move. Although the figures have not yet been broken down by country, around 2,500 full-time employees will be affected as well as 3,800 contractors.

"What we're hoping to do is to deliver greater shareholder value by making our processes more efficient, with a lot of economies of sale and rationalising the number of suppliers we're using," the spokesperson added. He described the nature of the transferred work as "back office stuff", such as the development and maintenance of Vodafone's customer relations management (CRM) systems.

The spokesperson stressed that Vodafone would remain "in charge of all the strategic elements", such as setting requirements and systems architecture.

Vodafone has had a poor year financially, although its share price has improved recently. In May, the company posted the heaviest losses in UK history (more than £14bn) and laid off hundreds of staff — chief executive Arun Sarin was later almost ousted in a shareholder revolt.