AT&T, Accenture Ink $500M Outsourcing Pact

By Colin C. Haley

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Continuing to outsource to save money and improve customer service, AT&T will pay Accenture $500 million over five years to manage its residential billing operations.

It's the second big-money deal between the companies. Previously, the communications giant and consulting firm inked a $2.6 billion contract to develop and integrate help desk systems using voice-recognition technology.

Under the new pact, 45 AT&T managers, whose work is within the scope of the agreement, will move to Accenture. Another 250 AT&T employees will be part of a shared Accenture operation but will remain on the AT&T payroll.

AT&T, of Bedminster, N.J., will retain control of business planning, credit policy and customer interaction, while Accenture will oversee the transition and ultimately handle the credit risk management and collections functions.

"(The deal) is an important opportunity to introduce new innovative capabilities and tools that support our plans for expansion into new markets, new offers and broader customer relationships, while delivering operational efficiencies," said John Polumbo, president and CEO of AT&T's consumer division.

In addition to its technology expertise, AT&T chose Accenture because of its experience in different industries, particularly financial services, which closely relates to this project.

Like other large companies, AT&T is farming out non-core tasks to third-party providers. Another recent example is Hewlett-Packard's 10-year, $3 billion IT Services deal with consumer goods maker Procter & Gamble. Among the most commonly outsourced items are call center systems, Web hosting and data storage management.

The practice is catching on with mid-tier firms as well, although the scope and value of the deals is smaller. According to experts at a recent trade show in Boston this week, outsourcing now accounts for between 10 percent and 25 percent of IT budgets.

It is popular in the state and federal governments, which are facing a budget crunch, as well as private firms in financial services and other sectors.