Sprint turns to IBM for customer service

The two companies announce a deal that builds on an existing alliance, as Big Blue takes over the management of several Sprint call centers.

Marguerite Reardon Former senior reporter
Marguerite Reardon started as a CNET News reporter in 2004, covering cellphone services, broadband, citywide Wi-Fi, the Net neutrality debate and the consolidation of the phone companies.
Marguerite Reardon
3 min read
Sprint and IBM are getting cozier as they agree to a five-year customer-service contract and new business initiatives that could be worth billions of dollars between the companies.

The new alliance builds on an existing relationship the companies announced in September 2003, and it is expected to open significant revenue opportunities for both companies.

"From enterprise solutions to customer service to IT outsourcing, Sprint's relationship with IBM is designed to drive long-term success," said a statement from Gary D. Forsee, chief executive officer of Sprint.

On Wednesday, Sprint announced a contract with IBM Business Consulting Services to help improve its customer service. Sprint's outsourcing plans and the deal between the two companies had been anticipated and was reported earlier. Specifically, IBM will handle customer segmentation, call routing and handle times for Sprint's wireless and long-distance customers.

IBM also will take over the management of several Sprint call centers, including 10 to 20 domestic and international centers that traditionally have been managed by third-party vendors and one Sprint-owned facility in Nashville, Tenn.

Sprint will continue to operate the remaining nine Sprint-owned service centers. As part of the new strategy, the company is consolidating its Dallas call center, which serves long-distance customers, into its existing Fort Worth, Texas, service center on April 30.

Sprint doesn't expect any layoffs as part of the changes, but roughly 1,270 employees will now be managed under the IBM-run centers. Sprint estimates these actions will result in cost savings of about $550 million over the next three years. A Sprint executive said that these savings are part of the $1 billion cost-cutting initiative the company announced in September 2003.

In addition to the consulting services, IBM and Sprint announced a business alliance. The two companies will jointly develop integrated products. IBM plans to market and sell these products to their corporate customers. Initially, this work will focus on products for mobile devices. Sprint said it will adopt IBM's Service Provider Delivery Environment (SPDE), software that allows corporate customers to link their desktops with their cell phones. Sprint is investing nearly $100 million in the adoption of IBM's SPDE.

"Real value to the customer comes from the ability to take the power of the network and desktop environment and integrate into a mobile environment," Forsee said in a statement. "No company can do it alone. With Sprint and IBM, you have a combination of network and product innovation and reliability, customer knowledge and service experience that will distinguish them in the marketplace."

IBM has focused its strategy on selling its infrastructure technology along with industry-specific consulting services. Dean Douglas, a vice president with IBM Global Services, said the win with Sprint validates the company's strategy. IBM's Business Consulting Services last year announced similar business initiatives with companies such as Procter & Gamble, Raytheon and Lincoln Financial. Douglas said the Sprint contract is the largest outsourcing deal of its kind to be announced to date.

IBM also manages customer care operations for Nextel Communications. Douglas expects more telecom providers to outsource customer care services to IBM, as well as other business operations such as human resources and finance.

"There are a number of different areas where telecom providers can take advantage of outsourcing," he said. "It's gut-wrenching to any company to outsource something as critical to their business as customer care or human resources, but I think companies are realizing that a third party can do it more efficiently and cost-effectively than their own internal organizations."