Posted on: Monday, June 25, 2001

Sluggish economy helping some

USA Today

SAN FRANCISCO — The economic tailspin may be helping some tech firms.

The downturn has prompted more companies to hire others to handle their information technology needs.

Despite the first decline in corporate spending on technology in a decade, the outsourcing market is going strong:

• IBM, the biggest information technology services firm, says outsourcing revenue in the first three months of this year jumped 16 percent from the same period last year. That rate was slightly below the growth rate of the previous quarter, typically IBM's strongest.

About 40 percent of Big Blue's $21 billion in quarterly revenue came from its services division, which includes outsourcing and other services, including such things as mainframe computer and Web site services.

IBM's overall services revenue rose a record 21 percent to $8.5 billion. In May, IBM nabbed an estimated $6.14 billion, 10-year deal with Fiat and signed a $2 billion, 12-year pact with NTL, a British digital-media company.

• EDS, No. 2 in information technology services worldwide, has logged nine straight quarters of record contracts, including $7.5 billion during its first fiscal quarter.

One of those: a $2.2 billion, 10-year deal with travel specialist Sabre. In the past year, EDS has won four of the 10 largest contracts in its 39-year history.

• Hewlett-Packard's services business rang up $7.3 billion in revenue in fiscal 2000, a better-than-expected 15 percent hike from the previous year. Among its recent customers: Sara Lee, which hired Hewlett-Packard to connect computer systems for 22 units in Europe.

Overall, the worldwide outsourcing market for software and hardware is expected to more than double to $832.9 billion by 2005.