Best Buy considers IT outsourcing options

Computerworld - Best Buy Co. may join the collection of retailers that are opting to outsource a significant portion of their IT operations to major technology services companies.
The Richfield, Minn.-based retail chain last week confirmed that it has been investigating outsourcing options for the company's IT and call center operations.
"We're always looking for new ways to increase our efficiency and operations, so there are ongoing discussions with potential vendors, none of which we can identify at this point," said Dawn Bryant, a spokeswoman for Best Buy. "There has been no letter of intent, much less a contract signed to date."
But it's possible the decision either has been made or is imminent. One retail industry insider, who asked not to be identified, said a Best Buy IT executive informed him that the company plans to outsource IT.
The Wall Street Journal recently reported that an internal Best Buy memo indicated that Accenture Ltd. is preparing to assume management of some of the company's IT services and telephone call centers by June 1. The memo stated that Best Buy anticipates that a significant percentage of IT associates will be offered positions with Accenture, according to the Journal.
That's what happened at Target Corp., a Minneapolis-based neighbor of Best Buy, when it signed a major outsourcing deal with IBM Global Services five years ago.
Sears, Roebuck and Co. is currently negotiating with Computer Sciences Corp. on an IT outsourcing deal that's expected to be worth about $2 billion over the next 10 years (see story). The deal, under which CSC would manage much of the IT infrastructure at Sears, is expected to affect about 260 of the retailer's 1,160 IT workers.
But Sears said it expects CSC to hire "substantially all" of the affected staffers. Gary Kelly, CIO at Sears, said earlier this year that companies that acquire an outsourcing contract usually hire some portion of the customer's IT workers.
Kelly said he expects the outsourcing deal to benefit Sears by heightening "the stability and reliability" of the company's infrastructure and reducing the cost of future IT improvements.
David Hogan, a senior vice president at the National Retail Federation in Washington, said the outsourcing trend among retailers is prevalent. "They're going to take a look at the things that do not give them a competitive advantage, whether that be telecommunications, networking, maintenance," Hogan said. Best Buy currently employs a mix of about 800 in-house employees and a fluctuating number of contract workers in its IT department, Bryant noted.
Best Buy CIO MarcGordon last month announced his resignation. Although the company plans to replace him, the job responsibilities may change, Bryant said.

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