Shell signs $4 billion outsourcing deal with AT&T, EDS and T-Systems

01 April 2008

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 figures
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.

The changes
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.