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Agilent nabs IT services deal with HP

The Hewlett-Packard spinoff will send a large part of its IT services to its former parent, CNET News.com has learned.

Agilent Technologies, the measurement and testing unit spun off by Hewlett-Packard in 1999, will outsource a large part of its IT services to its former parent, CNET News.com has learned.

The move, which was outlined in a recent memo to Agilent employees, calls for HP to manage Agilent's voice and data networks as well as handle its help desk and other services. The deal expands an existing relationship between the two companies in which HP manages Agilent's network operations in Europe and Asia.

The expanded deal with Agilent follows a number of high-profile wins for HP's services business including deals with Procter & Gamble, Ericsson and the Bank of Ireland.

A source familiar with the situation said the deal, which was finalized last week, was a competitive win against rivals EDS and IBM. The source said the deal calls for HP to provide Agilent with help desk and network services for five years and some PC management services for three years.

An HP representative said, "We just view this as another proof point of our momentum in the services business. We see HP increasingly playing a role as an alternative to IBM." The company would not discuss the financial terms of the deal.

HP has been trying to grow its business of managing other companies' technology assets. At the same time, HP Chief Executive Carly Fiorina noted on an earnings conference call on Tuesday that the services market as a whole remains weak, and she said the company will cut an unspecified number of services workers even as it adds employees through outsourcing deals.

Agilent, which bears much of the legacy of the oscillator company initially started by Bill Hewlett and Dave Packard, said in a memo that the deal with HP is part of efforts to give the company more flexibility, cut costs and focus on its core business. Agilent has been struggling to contain costs, announcing several waves of layoffs over the last two years including 4,000 job cuts in February.

As part of the deal, 138 Agilent IT employees will be offered the option of joining HP, according to the memo. Those workers who do transfer are expected to start work at HP around June 1, the memo said.

An Agilent representative confirmed the authenticity of the memo seen by CNET News.com, but did not comment further.