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January 15, 2002
AT&T to Pay Accenture $2.6B for CRM

By Erin Joyce

AT&T and consulting firm Accenture have signed a $2.6 billion outsourcing agreement designed to cut the phone company's long-distance customer care costs in half and deploy new customer relationship management technologies.

Dubbed a "co-sourcing" agreement, the five-year contract calls for AT&T and Accenture to bring their employees together to deploy new customer service technologies built around voice recognition systems and build new consumer products.

The deal is aimed at cutting costs in AT&T's consumer services division at a time when Internet-based and even cable telephony services offer consumers more choices in how to get phone services delivered, and threaten the long-distance provider's margins.

The arrangement would also result in layoffs within the phone company. During a conference call Tuesday to discuss the contract, Betsy Bernard, AT&T Consumer president and chief executive officer, didn't give specifics on how many employees would be cut (ahead of the company's earnings results on January 30th), and stressed that the contract was about more than layoffs.

"There is a plethora of technology initiatives that this deal addresses," she said. "This is a terrific business opportunity for both companies and a positive development for consumers, employees and shareowners." She said the agreement will help AT&T dramatically increase operational efficiency and manage the business while preparing to become a tracking stock later this year.

AT&T and Accenture staff are expected to work on deploying new automated customer service products, such as VoiceXML-based applications and natural language recognition systems that build on AT&T's own research, including its "How May I Help You" voice recognition system, which features natural language interpretation.

Dave Pramer, a partner with Accenture, said integrating voice-enabled, Web-based systems are also part of the focus.

"We'll be building in key areas, such as telephony service, third party verification involved in placing orders, (and) verifying that orders are placed properly. That's a big function in automating with voice technology."

AT&T Labs calls the "How May I Help You" system, which began customer trials in December of 2000, the most conversational of speech recognition systems available.

Bill Stake, currently vice president for AT&T Consumer's sales and customer care division, will head up the joint operation.

AT&T's consumer services division would still be responsible for establishing strategic business direction, defining marketing strategies and designing product offerings, the company said. The majority of the employees working on the deal would be from the AT&T side as well.

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