ArcelorMittal moves away from multisourcing

Steelmaker ArcelorMittal has said it is moving away from multisourcing, contrary to the trend among many large companies of signing smaller outsourcing deals with a range of providers.

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Steelmaker ArcelorMittal has signed new framework agreements with outsourcers Satyam Computer Services and MindTree, that last until 2011 in an effort to reduce costs, and improve processes and service levels.

ArcelorMittal said it is moving away from multisourcing agreements with a number of providers, contrary to the trend among many large companies of signing smaller outsourcing deals with a range of providers.

In a statement, ArcelorMittal said that following a review of IT subcontracting, it had chosen a “global supply model” to replace an array of IT suppliers that had become costly and time consuming to manage.

“This includes efforts to consolidate subcontractors’ activities, currently provided by a multitude of vendors, with two global IT providers,” it said, adding that Satyam and MindTree’s own choices of subcontractors would handle a small portion of the work.

ArcelorMittal did not disclose the value of the deals and said much of the detail was still being discussed. Its internal IT department would focus on “high value adding activities”, and it would not make any job losses to its 4,000 strong, £355 million IT operation, it said.

Satyam and MindTree will offer support for off the shelf and legacy applications, as well as executing IT consolidation projects while reducing the number of subcontractors.

Specific network services work will continue to be provided by BT, with which ArcelorMittal signed a smaller £13.9 million deal last October.

ArcelorMittal reaffirmed that it will later consolidate its main applications onto an SAP platform. When Mittal Steel merged with rival Arcelor in 2006 to create ArcelorMittal, the new group embarked on a major project to develop core business processes.

The move to not multi-source contrasts strongly with rival Corus, owned by Tata Steel, which last week told Computerworld UK its £400 million outsourcing deal with Capgemini had expired, and it was signing a range of smaller agreements instead. In January, Royal Dutch Shell signed a framework agreement with T-Systems, AT&T and EDS that will see 3,200 IT jobs move offshore.

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