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Big Blue takes on role of TV repair shop

IBM signs an after-sales services contract with consumer electronics giant Philips. The deal calls for Big Blue to handle warranty management and customer care--and even fix TVs.

Big Blue's next trick: overseeing television repairs.

In its latest push into the field of business process outsourcing, or BPO, IBM landed a deal to manage after-sales services for TV maker Philips Consumer Electronics in North America, the company said Wednesday. The contract is valued at about $300 million and runs for 7 years, according to a source close to IBM.

Big Blue said it will provide consulting to help Philips improve its customer service methods. IBM also said it will handle services for Philips, including warranty management, customer care and repair services. Some repairs will take place in an IBM center, but Big Blue also will work with Philips' authorized dealer network, IBM said. Philips TVs and CD players are among the more than 500 products the deal covers, IBM said.

"IBM will provide Philips with a new level of after-sales service, recognizing that the consumer electronics trend toward digital technology and embedded software requires new skills and service capabilities," Kathy Hegmann, general manager of IBM Global Business Transformation Services, said in a statement.

Philips said the arrangement is part of a program to increase efficiency and is designed to help improve customer satisfaction and brand loyalty.

IBM is one of a number of technology services providers moving into BPO, which refers to the farming out of tasks such as human resources administration and procurement. Hewlett-Packard recently entered the arena, while Electronic Data Systems and Computer Sciences have been offering such services for some time.

Big Blue bolstered its ability to offer business consulting and outsourcing when it bought the consulting wing of PricewaterhouseCoopers in 2002. Among IBM's BPO customers are consumer products giant Procter & Gamble and financial services company Lincoln Financial Group.

IBM said it expects to take more than 1 million calls per year related to the new Philips deal, which is slated to begin next month. Big Blue also anticipates about 800,000 repairs or exchanges per year.

Although IBM does not have expertise in televisions and some other consumer products, per se, the company argues that the deal makes sense, given the growing convergence between the computer and consumer electronics worlds. "Whether it's plasma TVs or MP3 players, these are largely digital products now," IBM spokesman Ian Colley said. "We do have expertise in these areas."