Problem:
Sprint and IBM have formed a five-year customer service contract, built on their existing relationship, and their new business initiatives could mean major revenue opportunities for both of them. The contract with IBM Business Consulting Services is intended to improve Sprint's customer service through customer segmentation, call routing, and handle times, and IBM will also assume the management of many of Sprint's call centres. By working with IBM on customer service, Sprint expects to save $550 million over the next three years, a big part of that company's $1 billion cost-cutting initiative announced in September. The two companies also formed an alliance to jointly develop integrated products that IBM will market to corporate customers; the first products will be for mobile devices.
IBM Global Services vice president Dean Douglas says the Sprint contract validates the company's strategy of combining industry-specific consulting services along with infrastructure technology. Although the Sprint deal is now the largest, IBM has struck similar arrangements with Raytheon, Proctor & Gamble, Nextel Communications, and Lincoln Financial. IBM also expects other telecom firms to outsource their customer service or human resource operations to them. Douglas says, "It's gut-wrenching to any company to outsource something as critical to their business as customer care or human resources, but I think companies are realising that a third party can do it more efficiently and cost-effectively than their own internal organisations."