Compaq inks contract with Blue Cross

The PC maker's services arm announces a five-year, multimillion-dollar contract with Blue Cross Blue Shield of Michigan, beating out rivals IBM Global Services, EDS and others.

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Compaq Global Services on Monday announced a five-year, multimillion-dollar technology services contract with Blue Cross Blue Shield of Michigan, beating out rivals IBM Global Services, Electronic Data Systems and others.

As earlier reported, with deals such as this, Houston-based Compaq Computer is looking to bolster its services revenue, which has recently sagged amid a downturn in technology spending. Compaq Global Services, the computer maker's services arm, accounts for 15 percent of the company's total revenue.

Effective now, Compaq Global said it will provide help-desk support, on-site software support, remedial maintenance and asset management services at Blue Cross Blue Shield (BCBSM) offices statewide. The deal, one of Compaq's largest to date, calls for supporting some 8,500 employees.

Financial details of the deal were not disclosed.

Last quarter, Compaq saw its services revenue decline slightly to $1.8 billion, from $1.9 billion during the same period a year ago. Income dropped to $241 million, from $275 million a year earlier. With consumer PC sales sluggish, the company has been aiming to rely on its business-computer sales and services units to pick up the revenue slack.

Though the demand for technology services and consulting overall has cooled, larger, traditional services providers such as Compaq Global, IBM Global and EDS have been able to win a solid number of deals because of their trusted brand and sheer size.

Meanwhile, most players in the sector--especially those that focused on Internet-related services--have been scrambling to land new business, turning their focus away from serving cash-strapped dot-coms to nabbing more lucrative and traditional outsourcing engagements such as the BCBSM contract.

On top of beating out giant rivals IBM Global Services and EDS for the project, Compaq Global said it won the deal over 13 other providers, including Unisys and GE IT Solutions. BCBSM provides health care payment services to nearly 4.8 million members.