Deutsche Post cancels HP outsourcing deal
Deutsche Post World Net has backed out of a planned IT outsourcing megadeal with Hewlett-Packard worth billions of dollars, InformationWeek has learned.
Deutsche Post, the German logistics company and parent to DHL, chose not to finalize the contract after a six-month review found the “benefits, particularly in the early years, do not outweigh the risks,” according to an internal memo.
The dropped outsourcing deal called for HP to hire 2,500 Deutsche Post employees, including those working for DHL. It included taking over the operations and management of data, infrastructure, networks, and software running in data centers in Scottsdale, Ariz.; Prague, the Czech Republic; Malaysia; and other regions.
Although the companies didn’t make the contract size public in January, when they announced the signing of a letter of intent, they said Deutsche Post would save at least 1 billion euros over seven years by outsourcing IT and expected to reach a “definitive agreement” with HP by the middle of 2008.
In a July 21 e-mail to employees, Stephen McGuckin, IT Services Managing Director at Deutsche Post, wrote that the deal had fallen through partly because it wasn’t going to bring Deutsche Post the expected savings.
During the past six months, “both companies have learnt much about the challenges, risks and benefits of the proposed outsourcing. More significantly [Deutsche Post] IT Services continued to improve its cost position, increased the number of services delivered while also maintaining service levels. Simply put, during the six months of the evaluation, our improving cost position made HP’s job that much harder and their cost reduction target that much more difficult to achieve.”
McGuckin added that the decision is “not a reflection of HP’s merits as a service provider; it is a vote of confidence in [Deutsche Post] IT Services and our track record of service delivery.”
Read More
