IBM wins seven-year $775 million Circuit City contract

IBM to handle IT operations for electronics retailer.

Circuit City, which is in the midst of a multiyear restructuring effort aimed at cutting costs and improving efficiencies, announced Wednesday that it has signed a seven-year $775 million contract with IBM to handle its IT operations.

IBM will provide a range of IT-related services for Circuit City, from data center and service desk operations to network management and services to e-commerce hosting and desktop support.

Circuit City says the deal, which will impact about 130 of its employees, with 50 of them transitioning to IBM, will reduce IT costs by more than 16% during the life of the contract.

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Circuit City, which is in the midst of a multiyear restructuring effort aimed at cutting costs and improving efficiencies, announced Wednesday that it has signed a seven-year $775 million contract with IBM to handle its IT operations.

IBM will provide a range of IT-related services for Circuit City, from data center and service desk operations to network management and services to e-commerce hosting and desktop support.

Circuit City says the deal, which will impact about 130 of its employees, with 50 of them transitioning to IBM, will reduce IT costs by more than 16% during the life of the contract.

Under the deal, IBM will support 600 Circuit City Superstores and more than 43,000 employees. IBM also will test and deploy new technologies aimed at improving in-store customer service.

“IBM has the experience and capability that we need to strengthen and modernize our IT infrastructure faster, better and more efficiently,” Bill McCorey, senior vice president and CIO at Circuit City, said in a statement.

Circuit City announced the contract with IBM along with other restructuring news, including the dismissal of 3,400 higher-paid store associates. Earlier this year, Circuit City announced it was closing a handful of stores. Also in February, CompUSA announced that it was shuttering 126 stores, or more than half of its 225 retail outlets nationwide.

While both Circuit City and CompUSA have been hit hard by a slowdown in consumer electronic sales, Best Buy seems to be one consumer electronics retailer weathering the storm.

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