Electricity and gas utility E.ON has signed large IT outsourcing deals with HP and T-Systems, covering its infrastructure but not applications.

The deals total €2 billion (£1.7 billion), according to a source speaking to the Wall Street Journal, even though the original tender was for up to €3.3 billion. E.ON declined to confirm the value.

The deals are part of the utility’s ‘PerformToWin’ strategy, which is aimed at improving processes. HP will support E.ON’s data centres and PCs, while T-Systems runs networking.

Some 1,400 of E.ON's 4,100 IT employees will transfer to HP and T-Systems. The 2,700 remaining will stay at E.ON’s IT department, which will continue to decide IT strategy, and will run applications, security and the main power station control systems.

In January, E.ON announced 75 UK job cuts from its IT function, following the closure of a call centre in Essex and an internal performance review.

Announcing the new contracts this week, Edgar Aschenbrenner, chairman at E.ON's internal IT function, said the company will aim to “streamline our IT and make it more efficient".