Shell strikes it big with outsourcing deal

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Details of Shell’s bumper $4bn outsourcing deal have given food for thought to the outsourcing industry.

Following months of speculation, the networking and telecoms component is going to AT&T for $1.6 billion; the hosting and storage deal has been clinched by Deutsche Telekom enterprise subsidiary T-Systems for $1 billion; and the $1 billion computing services and operational integration contract has gone to EDS.

Without doubt this is a huge deal, but not in the model of the traditional ‘mega-deal’ whereby an end user chose one single supplier for all IT outsourcing provision. Multi-sourcing has been widely discussed for the last few years and this is evidence that companies are heeding the multi-sourcing message.

There were rumours that the credit crunch would lead to a raft of quick-fire outsourcing deals. People believed that the need for a quick fix to cut bottom line costs would lead to a return to the mega deal because it is simpler and quicker to choose one supplier to do everything.

It is pleasing to see that the process Shell has adopted is similar to the National Outsourcing Associations best practice guidelines and that Shell has spent time considering their outsourcing options and finding an approach that will maximise their suppliers’ capabilities and the benefits to Shell.

By choosing three specialists, each will be able to exercise their specific expertise and Shell’s IT infrastructure can therefore be transformed by their high-level knowledge.

On another note, there were rumours in the press of fallouts with unions about the deal. Shell seems to have overcome the rifts with a programme of strong staff involvement and very limited redundancies. Those staff being transferred are consulted. All in all, it looks like the makings of an outsourcing success story.

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