It was recently announced that a partnership between IBM and Qwest had been expanded, as it has been working out well for both parties. Back in 2003, the two companies signed an IT operations contract, but this new contract should reduce the amount of risk that the companies will undertake. This is good news for shareholders of IBM, as they will not have to worry about the company’s financial future for at least the next five years, since that is the length of the current deal. These shareholders can also expect similar deals to be offered by different companies, as these companies will see that IBM is now handling a great deal of outsourcing and will surely inquire about the benefits. Shareholders of Qwest should be slightly less optimistic about this deal because the company has had the last seven years to figure out an IT solution for themselves, but have yet to do so.

Qwest is a communications company that entered into this partnership with IBM because they believed that IBM could manage their data centers, servers, storage, and backup services much more efficiently than Qwest could do itself. The great news for Qwest shareholders is that this new contract is much more cost efficient as well, as they want the same type of contract, except with less risk involved. It is believed that IBM will also be able to help Qwest save money in other fields, as they will be much for available to customers and will have a better IT infrastructure than they have ever had before.

Another potential issue here is the amount of security that is provided when outsourcing these financial records. If I was a customer of Qwest, I might not be happy about the fact that much of the company’s information is being sent elsewhere, as my contract would be with Qwest, rather than IBM. Obviously IBM would have to sign a non-disclosure agreement, but you simply can never be certain about information in today’s day and age, especially when it is being transmitted between two separate companies.

The reason why this could be considered a bad decision for Qwest is that they continue to place their company’s entire IT framework in the hands of an outside company. While this might not seem like a big deal on the surface, the truth is that it would be much cheaper to handle this in-house, if they had the technology and resources to do so. Basically, this means that Qwest has not been able to either hire the right personnel or develop the proper technology to handle their own IT concerns on their own, which can be considered a failure for a company of that size. It should be noted that even though IBM has agreed to reduce the costs associate with this service, IBM never comes cheap and Qwest is probably paying a lot of money each year for these services.

This deal is great for IBM because it gives them a major contract to work on, while improving the company’s stature in the business world. Other companies will see that IBM is being trusted with this massive job from a telecommunications giant and they will likely inquire into the services that IBM can provide. This is like free advertising for IBM and it will help the company reach even loftier heights in the future because they are now available for outsourcing information technology jobs from other high end corporations. In the end, IBM should end up being the winner in this deal, even though Qwest is surely receiving a service that they need at a price that they can live with.

It remains to be seen how this partnership will play out, although both sides appear to be pretty happy with the arrangement currently. The fact that the original deal was expanded upon and lengthened means that a good business relationship is developing between the two sides. Qwest must be happy with what it is getting out of this deal because otherwise, there would have been no reason to expand it. With that being said, however, shareholders at Qwest should be somewhat concerned about the fact that the company has not developed a way to handle these issues themselves.

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