Financial services company ING NV has signed a memorandum of understanding with four vendors to outsource its desktop IT and communications functions in Europe in a deal expected to be worth 800m euros ($1bn) over five years.
IT services firms Accenture, Atos Origin, Getronics, and telecoms operator KPN, have been named as the preferred supplier team to install, support, and maintain PCs, laptops, printers, and telephones to 53,000 ING employees in the Netherlands and Belgium.
The suppliers reportedly beat a rival bid from a consortium led by IBM Global Services, which also included Unisys and local services firm Centric.
ING expects to sign the final contract in the fourth quarter, and it will follow the plan the company announced last November to cut 500 jobs from its 13,000-strong Operations and IT division in the Benelux countries, and to outsource a further 2,200 staff to third-party suppliers. The company said the job cuts and outsourcing initiatives would result in annual cost savings of approximately 190m euros ($243m) from 2008.
Some 550 ING employees in the Netherlands and Belgium are expected to transfer to Atos Origin, Getronics, and KPN, which will all have individual contracts with ING. Accenture will act as an integrator with responsibility for providing account management, performance and project metrics, problem and change management, and SLA management.
Dirk Karl, managing director of operations and IT at ING, told a London conference in April that there were several reasons for going the multi-source rather than the single-source route. He said there is a perception of large outsourcers as being jack of all trades, masters of none. He added: The danger of working with just one vendor is that you end up getting a lot of customized solutions which leads to a lack of flexibility, and [single-sourcing] doesn’t enable you to address specific issues on a contract without endangering the whole deal.
The workspace-management deal does not cover ING’s operations in North America, which IBM Global Services currently supports as part of a seven-year, $600m desktop outsourcing deal announced in December 2003.
ING announced in April that it had provisionally agreed a six-year, 200m-euro ($256m) deal with LogicaCMG Plc to outsource some of its application development and maintenance functions. About 350 ING staff will transfer to LogicaCMG once the deal has been finalized. It also agreed a seven-year, 400m-euro ($512m) deal in May with Astron to outsource its document processing requirements.
ING’s outsourcing plan follows on the heels of a similar IT overhaul by rival bank ABN AMRO, which last year revealed plans to cut 1,500 internal technology jobs, transfer a further 2,000 to external vendors, and signed a total of $2.2bn in IT outsourcing contracts. ABN AMRO aims to make annual cost savings of 258m euros ($330m) from 2007 as a result.