Cable & Wireless Communications is set to outsource its IT department, probably including its entire billing operation, to IBM.
The contract is an unusual one for a telecoms firm and has been termed a "strategic services partnership" by IBM.
Simon Weedon, telecoms analyst at Deutsche Morgan Grenfell, said: "Outsourcing its billing system is like selling the family silver: it clearly shows that C&WC doesn't have the management skills to cope with the job itself."
Roy Paine, head of C&WC's corporate communications, stated: "We are currently reviewing all parts of the organisation and if outsourcing means we can reduce costs and improve efficiency then we will outsource." Paine claimed the billing operation would remain in house and has nothing to do with the IT department.
Industry sources disagreed, however. "Billing is a major part of the IT department: the two go hand-in-hand," said one source. "There is an immense amount of data processing involved in preparing bills in order to make sense of the information before the customer sees it."
Many of C&WC's recent problems are a direct result of the merger between Mercury Communications, Bell Cable-Media, Nynex and Videotron last year, said analysts.
"C&WC has been playing management musical chairs for years," claimed one analyst who wished to remain nameless. "This has been exacerbated by trying to glue together four companies."
C&WC's latest results show declining sales in the business and corporate markets. The company has laid off 1,500 staff in the last 12 months, including key board members.
- C&WC buys MCI Internet, p5.
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