HP to manage Avago’s IT services under 10-year deal

Hewlett-Packard (HP) will help semiconductor vendor Avago Technologies to manage its IT services under a 10-year, $236 million deal, the companieshave said..

HP will manage applications, servers, networks, desktops, printing and IT help desk services for Avago’s 6,500 employees, who are mostly located in India, Malaysia and Singapore.

Avago is the former semiconductor business of Agilent Technologies, sold in August 2005 to investment companies Kohlberg Kravis Roberts & Co. and Silver Lake Partners. In March 2006, they sold Avago again, to PMC-Sierra Inc., of Santa Clara, California.

Companies like HP and IBM Corp. have relied on services contracts as a major part of their businesses for years. But with contracts like Avago in play, other hardware vendors are now getting into the services game.

Dell Inc. said Thursday it had signed a 5-year, multimillion dollar agreement with The Boeing Co. to manage printers, desktops and notebook computers, workstations, displays, personal digital assistants, network printers and desktop peripherals.

Avago calls itself “the largest privately held semiconductor company in the world,” supplying analog, mixed-signal and optoelectronic components and subsystems to manufacturers worldwide. So why does a technology company need to outsource its own IT?

HP said Wednesday it will make the company’s technology operations more flexible and cut costs, according to the contract. By late summer 2006, Avago will be able to react faster to changing market conditions, Chief Information Officer Eugene Lau said in a release.

Avago will also turn over the management of its servers and storage, local and wide area voice and data networks, hardware procurement and asset management.

HP will look both within and outside the company to do the job. The company will turn to its own portfolio of HP tools to support Avago with desktop, imaging and printing, messaging and collaboration services.

In another piece of the package, HP will partner with the consulting arm of Oracle Corp. and with Satyam Computer Services Ltd. to use Oracle’s E-Business Suite for Avago’s enterprise applications.