IBM has secured a $775m, seven-year contract with US electronics retail chain Circuit City to manage its data centers, helpdesk, networks, security, and to provide hosting and in-store support services covering some 600 outlets and 43,000 employees.
The deal forms part of Circuit City’s plans to improve its profitability. Earlier this week the company revealed plans to cut 3,400 sales people, and said it was considering the sale of its Canadian operation. The company hopes to make cost savings of more than 16% over the length of the contract with IBM, while 50 of Circuit City’s in-house IT infrastructure team will transfer to IBM.
In a second major deal announced this week, EDS Corp has extended a contract with the largest convenience retailer in the world, 7-Eleven, to provide applications and infrastructure management services. The size or length of the deal has not been disclosed. EDS has provided IT services to 7-Eleven for more than 15 years, and the two signed a 64-month contract renewal last December for EDS to provide human resources outsourcing services including health and welfare plan administration.
The services vendor said it now generates more than $1.2bn in annual revenue from the retail sector. According to our parent company Datamonitor, the retail, wholesale, and distribution sector spent a total of $55.6bn on IT services in 2006, which would give EDS an industry share of 2%.
