ABN Amro seals EUR1.8bn IT outsourcing deal

ABN Amro seals EUR1.8bn IT outsourcing deal

Dutch financial services group ABN Amro has awarded a five year IT outsourcing deal worth EUR1.8bn to five vendors - IBM, Accenture, Infosys Technologies, Tata Consultancy Services (TCS) and Patni Computer Systems. The upheavals will lead to the loss of 1500 IT jobs at the bank.

The contract is part of cost cutting measures announced by the bank last December when it said it planned to axe 2850 jobs to generate annual savings of EUR770 million from 2007 onwards.

The new five year deal is one of the largest ever in European banking and will generate annual savings of EUR258 million from 2007.

The contract will also result in the loss of 1500 jobs over the next 18 months - 300 more than previously announced by the bank - and will eventually reduce the number of IT roles within the group from 5000 to 1800.

Under the deal around 2000 jobs will be transferred to the IT vendors - around 1800 will move to IBM and about 200 roles will transfer to Tata Consultancy Services.

IBM has won the lion's share of the deal and will be paid around EUR1.5 billion to maintain ABN Amro's global IT infrastructure - including servers, storage systems, data centres and desktops - as of November this year. IBM says the bank's infrastructure will be standardised globally using its data centre automation technology, Universal Management Infrastructure.

Indian firms Infosys Technologies and TCS will assume responsibility for maintaining and supporting software applications across the bank's business units as of 1 September. But the resulting job transfers are expected to take up to 18 months.

TCS says its deal with ABN Amro is worth over EUR200 million over the next five years. Infosys's SVP of finance, V Balakrishnan, told reporters that the ABN Amro contract was worth around $140 million (EUR114 million) to Infosys over the five years, but has the potential to go up to $250 million.

As part of the deal, ABN Amro also will also outsource application development to Accenture, IBM, Infosys, TCS and Patni. The companies will bid to develop new applications across all business units of the bank.

Commenting on the contract, Hugh Scott-Barrett, COO and member of ABN Amro's managing board, says: "This major IT initiative enables us to deliver the 'fuel for growth' to support the required sustainable competitive growth for the bank. The agreements with selected vendors allow us to utilise the latest technology to further improve the services we offer."

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