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July 31, 2012

Cemex Selects IBM for Consulting, Technology Services in $1 Billion Deal

By Ed Silverstein, TMCnet Contributor

Building products supplier, Cemex SAB de CV has selected to work with IBM (News - Alert) in a 10-year, $1 billion agreement where IBM will provide technology and consulting services.


It was estimated that Cemex will save almost $1 billion from IBM’s involvement and the services will improve the company’s customer service and efficiency. Several back-office functions will be outsourced under the deal. The deal includes finance, accounting, human resource services, IT infrastructure, application development and maintenance.

"Through this agreement, we reinforce our commitment to transform Cemex into an increasingly flexible, agile, and competitive global company,” Lorenzo H. Zambrano, CEO of Cemex, said in a press release. “Moreover, this agreement with IBM will enable Cemex to focus on its core businesses of cement, ready-mix concrete, and aggregates; improve its financial position; and respond more quickly to changing market needs."

"This agreement will bring to Cemex the flexibility to face the new challenges in the building materials industry. IBM's state-of-the-art IT infrastructure, business processes and applications will help Cemex achieve its goals of becoming more competitive. We see our strategic relationship with Cemex as a powerful example of building a smarter planet," Bruno Di Leo, senior vice president of Sales and Distribution for IBM, added in the press release.

Also, The Wall Street Journal explained the outsourcing deal will “shift a number of IT functions to the Web, allowing the company to cut certain costs in half, adapt more quickly to volatile market conditions, and focus more closely on its core business.”

An added plus with the deal is that IBM’s cloud resources will help Cemex to respond quickly if there was a global recession. 

Cemex saw a decline in U.S. business after a slowdown in 2008, according to The Journal.

The outsourcing deal could affect as many as 2,000 jobs at Cemex. Some of the jobs could be absorbed by IBM. The lost jobs may or may not be those now in Mexico, where the company is based.

The deal represents IBM's largest outsourcing project in Mexico, the companies said. It also demonstrates that emerging markets “are essential to IBM's growth strategy as the Silicon Valley giant posits that the technology infrastructures of emerging countries far exceed that of developed countries,” ZDNet said.

Cemex provides building materials to over 50 countries.



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Edited by Brooke Neuman



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