IBM will take over much of Sprint’s customer services operations as part of a five-year, multi-billion dollar agreement between the two companies.

The deal calls for IBM, which employs thousands in RTP, to manage 21 Sprint call centers already owned and operated by outside contractors, as well as a Sprint-owned call center in Nashville, TN.

In addition, a Dallas center serving Sprint long-distance customers will be consolidated into a center in Fort Worth, TX. Sprint, which serves customers in North Carolina, will continue to operate its seven other customer service centers.

The agreement would involve shifting about 5,600 employees overseen by Sprint to IBM, which would then sub-contract responsibility for about 1,100 workers in Nashville to Convergys Corp.

As a result of these actions, Sprint estimates that its customer service costs should be reduced by an estimated $550 million over the next three years. Sprint had operating expenses of $6.36 billion in 2003.

“The moves we are making are designed to improve our competitiveness in the marketplace,” Sprint Chairman and CEO Gary Forsee said at the company’s annual investment community meeting Wednesday in New York. “We continue to play what I believe is a winning hand in terms of assets and strategy.”

Sprint’s deal with IBM also calls for Big Blue to sell its customers the communication company’s phone and data services, and for Sprint to pay nearly $100 million to deploy an IBM technology that enables customers to transfer desktop computer applications to a mobile device.

IBM last year announced similar business transformation initiatives with companies such as Procter & Gamble, Raytheon, Avnet, Lincoln Financial and UTC, and is also providing similar services to other communications carriers.

IBM: www.ibm.com

Sprint: www.sprint.com