As previously reported, Cable & Wireless, among the largest cable companies in the world, was in talks with Big Blue to help manage C&W's computer network and billing operation. This deal marks the largest agreement of its kind between a major communications company and the world's largest computer company.
Although analysts pointed to the cost savings that could occur with such a move, executives with Cable & Wireless had noted that their interest in the deal was driven by the benefits it expected to receive by using the resources of a much larger company, instead of handling the duties in-house.
Shares of Big Blue were up in morning trading, as with the markets overall.
Under the ten-year deal, Cable and Wireless will transfer 1,000 employees to IBM's Global Services. IBM will also create 400 new jobs to handle the work.
"This partnership brings significant benefits to us. It will enable us to deliver the IT systems necessary to provide high levels of business efficiency and customer service in a growing communications company," C&W chief executive Graham Wallace said in a statement. "We will be able to do this much more quickly and effectively as a result of this partnership by harnessing the skills, experiences, and global resources of IBM."
Cable & Wireless, however, will still be responsible for its IT strategy and systems security. Meanwhile, IBM established an international customer support center for integrated customer management systems in the United Kingdom.