HP and BT have agreed a monster $1.5 billion outsourcing deal which will offer customers integrated IT and telecommunications services, the two companies announced.

"We see the IT and communications industry coming together," said Carly Fiorina, HP's chairman and CEO, at a news conference in New York. She added that the agreement will allow the two companies to combine offerings and service-level agreements.

Under the seven-year contract, HP will manage BT's mid-range and desktop IT infrastructure services within the UK, including 100,000 desktops. In turn, BT will manage HP's voice and data network and product-support call centers in Europe, the Middle East and Africa.

The contract value is split between the two companies. As part of the deal, 290 BT employees will become HP employees, and 40 HP employees will move to BT. The agreement "becomes operational" on 1 July, officials said.

HP already works with US telecoms providers to provide joint-service proposals, and Fiorina said her company has service agreements with customers "where there is a big communications component of that relationship".

"What's different about this relationship today is it is anchored in a mutual outsourcing of each other's infrastructure," said Fiorina. Both companies "are building together a set of completely integrated services offerings," she said.

"We think that provides to the customers a tremendous amount of benefit in terms of being able to manage an end-to-end service and set of service levels associated with it," said Anne Livermore, HP's technology solutions group VP.

Ben Verwaayen, BT Group's CEO, said the agreement "is a recognition that our IP networks on a global basis now have the security and reliability that you can drive vital services over them."

In terms of what integrated offerings we can expect, Anne Livermore said: "If you look at the components that we can integrate for a customer, there is the communications infrastructure [voice and data network], IT infrastructure [all the computing aspects], workplace services [all the things an end user needs]. A fourth component is around mobility services [wireless phone, laptop]; fifth, the applications and call center services."

She also said that HP would move BT onto a more common operating environment, with a common image on the desktop, as well as more updates and distribution of software over the network to the desktop. HP will also provide more-standardised helpdesk services, she added.