Datamonitor IT Services Contracts Analytics

The energy giant, BP, awarded application outsourcing deals to five different vendors, with the projects estimated to have a combined value of $1.5 billion.

IBM won the biggest deal, which Datamonitor estimates to be worth around $700 million. The company will run all of BP’s enterprise applications, as well as handling its integrated service desk responsibilities. Accenture, which (like IBM) has worked extensively with BP in the past, will be the company’s strategic service provider for SAP development work.

Joining IBM and Accenture, two of the biggest IT services providers in the world, on the list of vendors selected by BP are the three biggest Indian outsourcers: TCS, Infosys and Wipro. All three will provide application development and maintenance services, with TCS delivering to BP’s refining, manufacturing and corporate IT departments, Wipro covering the company’s fuels value chain and corporate businesses and Infosys responsible for BP’s integrated supply and trading, and exploration and production divisions.

The deals awarded by BP are actually part of a major vendor consolidation strategy, which has reduced the number of vendors it deals with from about 40 to just five. The company has a history of awarding major outsourcing deals. In 1999, it handed over its U.S. back-office and accounting divisions to PwC in a deal valued at $1.1 billion over 10 years, and in the same year it signed a landmark human resources outsourcing contract with Exult (which was later acquired by Hewitt Associates).

Away from the BP deals, and signing activity in the outsourcing market continued to be driven by U.S. federal government agencies. Northrop Grumman won the biggest such deal, a $430 million, five-year award from the U.S. Army to continue providing full-spectrum information operations and computer networks operations to the 1st Information Operations Command (Land) and its regional Computer Emergency Response Teams. Northrop Grumman has been delivering such services since 1997.

Electronic Consulting Services also won a major deal with the U.S. Army, worth $270.6 million over five years. The company will provide systems engineering and technical assistance services to the Program Executive Office for Simulation, Training and Instrumentation (PEO STRI). Other significant U.S. federal government deals include Serco’s $190 million project for the Department of Homeland Security’s U.S. Citizenship and Immigration Services unit and SAIC’s systems integration deal with the U.S. Navy, valued at $120 million.

The Ten Largest IT Services Deals in August 2009