Ericsson today signed a five-year contract with IBM to outsource the development, implementation and maintenance of IT applications supporting Ericsson's operations worldwide.

The Memorandum of Understanding signed in June this year has now resulted in a contract.

Under the terms of the agreement, IBM will provide development, implementation and maintenance services of internal IT applications, also referred to as IS (Information Systems), supporting Ericsson's operations. The agreement includes transfer of the personnel at Ericsson Process and Application Consulting to IBM. The transition will start in September.

"Outsourcing of services for IT applications is part of Ericsson's ongoing changes within the IS/IT area, and our overall restructuring program aiming at radically reducing the operating expenses and cost of sales," said Per-Arne Sandström, Deputy Chief Executive Officer at Ericsson.

"Through IBM Business Consulting Services and Application Management Services, IBM has a deep understanding and broad expertise in IT application management," said Doug Elix, Senior Vice President and Group Executive, IBM Global Services. "We will use our in-depth experience to help Ericsson transform and enhance the software applications that support its worldwide operations."

Ericsson cannot disclose the financial terms of the agreement.