BBC Awards Siemens $3.7B Outsourcing Pact

British Broadcasting Corp. has picked Siemens Business Services Ltd. to take over its technology arm in a $3.7 billion deal that's one of the largest outsourcing pacts signed this year.

The 10-year agreement, the result of a contracting process that took only about six months, calls for the BBC to sell its wholly owned commercial subsidiary, BBC Technology Holdings Ltd., to Siemens. BBC Technology employs about 1,400 workers.

John Varney, the BBC's chief technology officer, said Siemens was chosen because the company "understood our technology vision [and] where we need to get to."

Most important, "it was a very, very strong cultural fit," said Varney, who noted that the Berkshire, England-based Siemens unit got the nod in part because of its willingness to be flexible. "They understand the nature of this contract, in that it will need to be very dynamic - it will need to evolve over the next 10 years."

Moreover, Siemens is "prepared to travel with us as we move toward a different world of broadcasting," Varney said. "The basis of our transformation is to use Internet technologies to bring program-making to every desktop."

The BBC began its selection process in December with an advertisement for bidders. It compiled a list of 31 vendors and quickly reduced that to nine and then three: Siemens, Accenture Ltd. and Computer Sciences Corp., which dropped out of the running.

Varney said it's possible to put together a complex outsourcing deal rapidly if enough people are assigned to it. The BBC assembled a team of about 70 people who conducted "1,000 man-days of negotiations" over a four-week period, he said.

The BBC used a combination of objective measures and subjective assessments in reaching its decision, Varney said. In a previous interview , he said it was important that teams from the BBC and the vendor be able to work well together -- something he said has been accomplished with Siemens.

John Varney, CTO at the British Broadcasting Corp.
John Varney, CTO at the British Broadcasting Corp.
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