Deutsche Post, HP services sign letter of intent for it outsourcing agreement
SOURCE: Press Release
DATE: January 24th, 2008
Deutsche Post World Net AG said it and HP (NYSE:HPQ) Services have signed a letter of intent to enter into an IT outsourcing agreement.Deutsche Post plans to outsource part of its global IT activities to HP Services and forecast cost savings of at least 1 bln eur over the next seven years.Both parties expect to enter into a binding agreement by mid-2008.
Additional Details
Deutsche Post AG, Europe’s biggest mail carrier, plans to transfer 2,500 IT operations employees to Hewlett-Packard Co. to cut costs.
In a statement Thursday, HP, the world’s biggest manufacturer of printers, will take over running DP’s data and network management centers in Europe, the U.S. and Asia. The agreement, which is expected to be completed in the next six months, will allow the postal service to save at least $1.47 billion in the next seven years.
DP did not disclose the cost of HP’s services.
In November, DP introduced initiatives to raise at least 1 billion euros in cash in two years by selling property and to save another 1 billion euros by boosting efficiency. Outsourcing of its IT operations is one of the efficiencies introduced.
Under the terms of the letter of intent, DP will contract out data work to HP, which in turn will take over managing data centers in Prague and elsewhere in Europe; Scottsdale, Arizona; and Cyberjaya, Malaysia.
According to Bloomberg, HP will take on the DP employees and some assets, such as computers, that it needs to do the job, postal service spokeswoman Nicole Mommsen said. The German company expects to get about 200 million euros from the sale of assets, subject to negotiations, she added.
DP, however, will continue to develop its own computer applications, including security standards, the company said.
“We are constantly looking for new ways to reduce costs and improve the quality of the services that we provide to our customers,” DP finance chief John Allan said in the statement.
DP announced it will write down the value of some assets at its DHL Express unit’s Americas division by 600 million euros as the business struggles to make a profit.
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