Sprint sues IBM over failed outsourcing deal

By Michael Cooney, NetworkWorld.com, 05/25/06

Published reports say Sprint is suing IBM over a botched outsourcing contract. Sprint signed on with IBM in 2004 with a five-year contract that Sprint expected to save $550 million in customer-service cost reductions over three years. Now Sprint says the deal cost the company, and claims IBM owes it at least $6.4 million for 119,000 hours of uncompleted work.

In a lawsuit filed this week in U.S. District Court in Kansas, Sprint/United Management Co. - a subsidiary of Sprint Nextel Corp. - said IBM didn't provide "contractually promised productivity improvements for 2005."

IBM, according to court documents, said Sprint is using an incomplete formula for measuring productivity and the amount of hours owed. IBM spokesman declined to comment on the suit, according to an Associated Press report.

The lawsuit is but the latest in a string of soap opera-like occurrences between the two technology giants. Earlier this year Sprint took back some of the application development and support work that it outsourced to IBM in 2004.

And last year's Sprint and Nextel merger led to another contract amendment centered on application development. Details on that amendment were sketchy.

IBM also manages Sprint customer service in an unrelated five-year, $2 billion contract.

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