Oil powerhouse Royal Dutch Shell plc has announced the awarding of billion-dollar contracts as part of a $4 billion deal to outsource the bulk of its technology infrastructure.
The $1.6 billion telecommunication services contract has been awarded to AT&T while EDS has bagged the $1 billion information technology outsourcing services deal. German telecom major Deutsche Telekom has been awarded a contract worth $1.4 billion to assume responsibility for Shell's data centres worldwide, according to an announcement by its T-Systems corporate services unit. All of these contracts have been awarded for a period of five years.
In a nutshell, from July the companies will serve Shell and its subsidiaries in more than 100 countries, with AT&T looking after network and telecommunications, T-Systems hosting and storage, and EDS looking after end user computing services and operational integration of the infrastructure services.
About 2,960 Shell information technology staff and contractors are expected to be transferred under the deal with AT&T, EDS and T-Systems, with Shell saying there will be ''20 to 30 redundancies at worst''. However, they will not retain their existing rights and redundancy packages under their new employers, which are expected to lapse after two years.
This is a concern with employee unions, and Union Amicus had earlier threatened to block the deal through legal action. However, Shell management had tried to assuage fears by saying staff would be able to choose ''as much as possible'' whether they were transferred to a new employer, as well as retaining existing packages for the present.
The oil multinational expects ''significant improvements in efficiency and productivity'' and to deliver ''important financial benefits to Shell'' during the five-year deal, it said in a statement.
The AT&T deal
Shell has its US headquarters in Houston, Texas, where 60 employees have been given the opportunity to transfer to San Antonio-based AT&T. A total of 560 networking professionals in the Netherlands, Malaysia, the United Kingdom and the United States have been given opportunities to transfer from Shell to AT&T offices in their respective countries.
AT&T will provide managed network services to Shell and its subsidiary companies in more than 100 countries over the five years of the contract. It will develop wide area and local area networks (WANs and LANs), voice and Voice over Internet Protocol (VOIP) services, managed security and wireless services to connect 1,500 Shell offices and 150,000 Shell employees.
It will also be responsible for 600 third-party contacts with 300 Shell vendors internationally, as well as managing cellular services contracts currently provided by other mobile operations.
The EDS contract
EDS, based in Plano, Texas, will manage Shell's end-user computing services including desktop, service desk, on-site services, back up and disaster recovery, mobile information protection and managed messaging services, for 150,000 users in more than 100 countries.
The company will be the operational integrator for the three contracts, and oversee the work being done by AT&T and T-systems. Around 1,500 Shell staff and contractors are expected to shift operations to EDS offices under this deal.
The T-Systems deal
T-Systems will take over the infrastructure and IT professionals of Shell's global data centres, including three centres in the Netherlands and one each in Malaysia and the US. In addition, most of Shell's SAP services will be transferred to T-Systems' Dynamic Services Platform.
Approximately 900 Shell employees are expected to shift employment to T-Systems as part of this deal, which promises to boost the latter's foreign revenues by as much as 20 per cent. It said it had the option to extend the contract with Shell for global hosting and storage services after five years.