5th Oct 2006 12:00
Vodafone Group Plc05 October 2006 5 October 2006 VODAFONE SELECTS TWO PREFERRED SUPPLIERS IN GLOBAL OUTSOURCING DEAL Vodafone has selected EDS and IBM to manage its application development andmaintenance services in a global IT outsourcing deal, as part of its strategiccommitment to reduce costs while leveraging its regional scale. Vodafone hopesto conclude negotiations and finalise contracts with the two outsourcingpartners in the coming weeks. Under the terms of the proposed arrangements, each outsourcing partner willprovide application development and maintenance services for key IT systems toseparate groupings of operating companies within the Vodafone Group. Vodafonewill retain full strategic control of the initiative, which focuses on writingcode for and maintaining systems such as billing and Customer RelationshipManagement. The proposed arrangements form part of Vodafone's cost reduction strategy.Against this backdrop, Vodafone continues to stimulate revenue growth throughthe roll out of new services and attractive tariffs which encourage customers touse their mobile phones more extensively within the home and office. Today's announcement is the result of a rigorous eight-month selection process,which has reduced the number of candidates from 11 to two preferred outsourcingpartners, subject to final contract. Candidates were assessed against a widerange of criteria including technical capability, outsourcing expertise, costand cultural fit to ensure the future success of the partnership. As previously announced, Vodafone has identified the potential to reduce unitcosts by 25 to 30 percent within three to five years. Activity levels onapplication development and maintenance during the last financial year resultedin a spend of around £560 million. Under the plans, the number of applicationdevelopment and maintenance suppliers currently used by the Group will berationalised by the two partners, bringing greater economies of scale. The Groupalso anticipates that the initiative will result in improvements to the qualityof software produced, as well as greater flexibility, leading to the faster rollout of more varied services to customers. Under the proposals, the substantial majority of impacted staff are expected totransfer to the employment of the outsourcing partners, and work from similarlocations under similar terms and conditions where possible. The remainder ofstaff will be retained by Vodafone. The Group is currently in full consultationwith staff likely to be impacted by the changes. Arun Sarin, Chief Executive of Vodafone, said: "This initiative is a goodexample of how Vodafone is finding new ways to deliver greater cost efficienciesacross the business. We are exploring the possibility of outsourcing othernon-core activities so that we can focus on our customers. "The outsourcing of this application development and maintenance workcomplements a series of other projects designed to reduce Group overheadsincluding the regional consolidation of data centres and the centralisation ofnetwork supply chain management." - ends- For further information: Vodafone GroupInvestor RelationsTel: +44 (0) 1635 664447 Media RelationsTel: +44 (0) 1635 664444 CAUTIONARY STATEMENT This press release contains "forward-looking statements" with respect toVodafone's anticipated benefits, including anticipated cost savings, from theglobal IT outsourcing deal described above. By their nature, they relate toevents and depend on circumstances that will occur in the future. There are anumber of factors that could cause actual results to differ materially fromthose expressed or implied by these forward-looking statements. These factorsinclude, but are not limited to the following: failure to conclude negotiationsand finalise contracts with one or both outsourcing partners; failure by theoutsourcing partners to perform as expected under the outsourcing arrangements;changes in the scope of the work outsourced; slower than anticipated transfer ofcertain activities to the partners; changes in the number of staff expected totransfer to the outsourcing partners; changes in Vodafone's IT systems; higherthan anticipated costs to be incurred by Vodafone under the outsourcingarrangements; and the impact of exchange rate fluctuations on the cost of theservices to the Group. Furthermore, a review of the reasons why actual resultsand developments may differ materially from the expectations disclosed orimplied within forward-looking statements can be found under "Risk Factors,Trends and Outlook-Risk Factors" in the Group's Annual Report for the financialyear ended March 31, 2006. All subsequent written or oral forward-lookingstatements attributable to Vodafone or any member of the Group or persons actingon their behalf are expressly qualified in their entirety by the factorsreferred to above. No assurances can be given that the forward-lookingstatements in this document will be realised. Neither Vodafone nor any of itsaffiliates intends to update these forward-looking statements. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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