New York, July 31: International Business Machines Corp signed a 10-year, $1.1 billion agreement with Swiss engineering company ABB Ltd to manage the bulk of its technology, the companies said. Armonk, New York-based IBM said it will take on 1,200 employees as part of the deal, which is aimed at cutting costs at Zurich-based ABB as it tries to return to profitability.

A spokesman for ABB said the company expects annual savings of at least $50 million from the agreement, which involves 90 percent of its technology operations.
IBM is the world’s largest computer company and nearly half of its revenue in the latest quarter came from its services division. Investors watch that division closely because it has been a stable source of revenue and because IBM often can sell hardware and software to those customers.
It is typical for IBM to hire the employees when it takes over managing technology at a company. The deal includes 510 ABB employees who were already transferred under two pilot projects and another 780 employees who will be moved, the companies said in a joint statement. Bureau Report