ABN Amro has awarded a five year IT outsourcing deal worth Euros 1.8 billion to five vendors – IBM, Accenture, Infosys Technologies, Tata Consultancy Services (TCS) and Patni Computer Systems. The deal will lead to the loss of 1,500 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 Euros 770 million from 2007 onwards.
The new five year deal is one of the largest ever in European banking and aims to generate annual savings of Euros 258 million from 2007.
The loss of 1,500 jobs over the next 18 months is 300 more than previously announced by the bank, and will reduce the number of IT roles within the group from 5,000 to 1,800. Around 1,800 ABN Amro jobs will be transferred to IBM and about 200 jobs will move to Tata Consultancy Services.
IBM has won the major share of the deal and will be paid around Euros 1.5 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. The vendors will maintain selected 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 Euros 200 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 (Euros 114 million) to Infosys over the five years, but had 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.
“This major IT initiative enables us to deliver the ‘fuel for growth’ to support the required sustainable competitive growth for the bank commenting on the contract,” says Hugh Scott-Barrett, COO and member of ABN Amro’s managing board. “The agreements with selected vendors allow us to utilise the latest technology to further improve the services we offer.”