Thursday, February 5, 2004

Convergys in big deal to serve Sprint

Teaming with IBM, it signs 5-year contract

By Mike Boyer
The Cincinnati Enquirer

A day after its stock took a hit on investor fears of competition, Cincinnati's Convergys Corp. said it is teaming up with IBM to provide customer care for Sprint Corp. in one of the largest business outsourcing deals of its kind.

Convergys, which has provided customer care for Sprint for seven years, will more than double its business with the Overland, Kan.-based telecommunications company, Jack Freker, president of Convergys' customer-care unit, said Wednesday.

While the companies aren't providing details, Sprint said the five-year, multibillion-dollar outsourcing agreement would cut its customer management costs by $550 million in the next three years.

As part of the deal, Convergys will take responsibility for 1,100 employees at Sprint's Nashville, Tenn., call center. IBM will manage that facility and all of Sprint's vendor-operated call centers. IBM said it would help Sprint improve call routing, call handling time and first-call resolution.

Freker said Convergys and IBM have been working together to win the Sprint agreement since last year.

"We have a long relationship. They are a customer of ours, and we are a customer of theirs," he said.

Convergys' shares rose 51 cents Wednesday, closing at $16.05. A day earlier, the stock dropped $1.33 on investor fears that the IBM-Sprint agreement might curtail Convergys' work with Sprint.

This is the second major deal that Convergys has signed in recent months with Sprint, the nation's fourth-largest wireless provider. In December, Convergys announced a seven-year extension of its billing services agreement with Sprint, after the carrier abandoned a two-year effort to develop its own billing system with a Convergys rival.

IBM said the Sprint agreement is one of the largest of a new type of information-technology outsourcing called "business transformation outsourcing'' where vendors not only take over a corporation's non-core operations but also agree to make improvements.

One example cited by IBM is its 10-year agreement with Procter & Gamble Co. announced in September to handle P&G's human resource functions.


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