The two companies are also in the "final stages" of renegotiating a separate deal under which Sprint outsourced management of its customer-service call centers to IBM, according to a spokeswoman for the telecommunications vendor. That agreement, also covering five years, was said to be a multibillion-dollar deal when it was announced several months before the software services contract was disclosed.

Last year's merger of Sprint Corp. and Nextel Communications Inc. led to the amendment of the application outsourcing contract, the Sprint spokeswoman said in a statement sent via e-mail. Richard LeFave, CIO of the combined business, came from Nextel. Former Sprint CIO Michael Stout, who oversaw the contract negotiations with IBM, has left the company.

LeFave wasn't available for comment last week, the spokeswoman said. She disclosed few details about the changes being made to the software deal but said a "select number of IBM employees working on application development will be offered employment at Sprint."

When the initial agreement was signed, the companies said that about 1,000 Sprint IT workers would transfer to IBM and that the deal was designed to speed up Sprint's delivery of applications and help it cut annual operating costs by $1 billion in 2004 and 2005.

According to Sprint, IBM will still provide application development and maintenance support services under the amended agreement. Sprint itself "will retain full application ownership," including life-cycle management, architecture, system analysis and design responsibilities, the spokeswoman said.