International Business Machines (IBM) said that it has signed an agreement with Essex County Council to help the council lower taxes, deliver enhanced services and provide incremental savings to Essex’s clients. The contract, which was signed in Dec 2009 spans over a period of 8 years.

IBM will provide a range of transformation services that may include the design, management and delivery of front-end customer services, back-office and corporate systems, as well as business consulting and technology services.

Under the agreement, IBM and Essex also signed two projects, which are in the initial stages of the transformation program and will involve the modernization of the Council’s back-office function and streamlining of procurement.

IBM’s Global Services plays an important role in the company’s strategy of providing IT infrastructure, business insight and systems solutions. It includes IBM’s own software and hardware, as well as those provided by other suppliers.

Weakening demand, continued decline in hardware and rising pressure in its Services business have affected IBM’s operations. If demand remains under pressure, the services business will remain a drag on near-term results. IBM signed services contracts worth $14 billion in the second quarter, a decrease of 5% from the year-ago period.

In an effort to grow its services business, the company is signing new contracts and seeking out new alliances and partners for its various products and services. We believe these strong alliances and customer wins will leverage IBM’s global scale and expand margins, thereby creating value for the company in the long term.

We maintain our Neutral rating on IBM.

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