Chicago (IL) – Sprint today said that it will outsource network operations to Ericsson in a deal valued at about $5 billion over the next seven years. 6000 Sprint employees will be transitioned to Ericsson to make sure that cellular network will do what it is supposed to do. Customer service will remain with Sprint.
The agreement between the two companies follows a services trend we have seen in many other industries for several years – companies hire other companies to run and manage their IT and technology operations in an effort to increase efficiency and hopefully reduce costs.
Sprint said that it retains full ownership and control of its network assets, and keeps the authority over network strategy and investment decisions, which includes technology and vendor selections. The carrier will continue to do customer service itself, with Sprint employees being the primary contact for customers.
Ericsson will assume responsibility for the day-to-day services, provisioning and maintenance for the Sprint-owned CDMA, iDEN and wireline networks. And, in an effort to reduce costs, Ericsson will “optimize Sprint’s multi-vendor inventory of assets, “such as spare parts and transmission equipment, and provide processes and tools for managing the national network platforms and operational support systems, Sprint said.
At the beginning of the year, Sprint had about 56,000 employees. 8000 will be or already were laid off, which means that the 6000 employees that will join Ericsson will reduce Sprint’s payroll to about 42,000, which is down 25% from the beginning of the year. Ericsson said that it does not plan to let go any of the 6000 “transferred” employees.
According to Sprint, the outsourcing deal is valued somewhere from $4.5 to $5 billion.