But IBM Gets a Contract Win, Too

IBM and The Hertz Corp. last week agreed to an early extension of the IT outsourcing relationship the companies have had since 1993.

Hertz will pay $154 million over six years to have IBM continue to provide it with a variety of IT services. The contract extension comes about a year before the current contract was set to expire.

IBM manages mainframes at Hertz's data center and provides application development and application management for the company's claims management and equipment rental units, said Claude Burgess, Hertz's vice president of technology and e-business. IBM also provides disaster recovery services to Hertz.

One difference with this renewal is that some of the application management and development work will be done by IBM employees in India, whereas all of that work was previously done in the U.S., he said.

The long outsourcing relationship with IBM is a rarity for Hertz, a company that, according to Burgess, manages most of its IT tasks internally. The IBM contract is the largest IT outsourcing agreement at Hertz, which has several other small agreements, he said.

Hertz extended the contract because IBM is providing good, consistent service and a knowledgeable staff with little turnover, Burgess said. "They are consistently graded highly by users," he said.

The core outsourcing agreement has spawned separate consulting engagements for IBM when Hertz has needed advice on a particular IT project or issue, Burgess said.

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