Nokia calls on IBM for outsourcing deal

Nokia has signed an agreement with IBM under which Big Blue will run the handset maker's help desk operations and support its desktop PCs.

The deal is worth about 200 million euros ($251 million) over five years, with Nokia following a "pay per use" model for help desk, call center and software support for its 57,000 employees around the globe. About 430 of Nokia's employees in a number of countries will join IBM as part of the agreement, which was announced Friday.

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Nokia said that with the deal it aims to focus more on its core business and information technology activities, to gain service flexibility and to cut costs. That puts the telecommunications equipment maker in the company of a growing number of businesses that now see desktop PCs as more of a commodity and less of a strategic tool.

Hewlett-Packard and other big technology companies have been vying to win contracts like the one with Helsinki, Finland-based Nokia. IBM recently signed similar PC and software maintenance deals with Electrolux, Zurich Financial Services and ABB.

For IBM, the Nokia and Electrolux deals also are an opportunity to play up its take on the utility computing trend, which it refers to as on-demand computing. Under that model, businesses essentially rent high-tech equipment and services as needed, rather than buying equipment outright and taking on the added expenses and the administrative headaches.

"This agreement ensures that we benefit from IBM's latest technologies for our businesses through on-demand services", Gordon Jack, vice president of business Infrastructure at Nokia, said in a statement.

Market researcher IDC this week predicted that spending on utility computing products will reach about $4.6 billion by 2007, up from $1 billion last year. IDC and others have pointed out that utility computing deals should help make it easier for computing companies to keep a grip on existing companies and sell other products outside the scope of the contracts.