ABN Amro looks set to outsource all IT services for its Wholesale Clients unit to EDS. The deal, worth at least $1.46 billion, will be one of the largest ever IT outsourcing deals in the banking industry. It could represent the turning of the tide for service providers – particularly as there are other, even larger FS outsourcing deals in the pipeline.
ABN Amro and EDS are in final contract discussions over a $1.46 billion IT services contract.
Dutch-based bank ABN Amro and US IT services firm Electronic Data Systems have announced that they are in final contract discussions to award EDS a five-year IT services contract worth at least $1.46 billion. EDS expects to sign the deal with ABN Amro in Q4, to begin work on January 1.
The deal would involve EDS taking over all IT services for ABN Amro’s Wholesale Clients unit – one of the bank’s three main divisions. Dealing with international corporations and institutions, the division has about 10,000 clients and a staff of around 22,000 in over 45 countries. As part of the contract, about 1,000 of these employees look set to transfer to EDS.
The deal is expected to include a range of infrastructure services, including IT outsourcing for mid-range devices, desktop support, local web servers and helpdesk support. It will also include some applications development and management.
Financial services institutions have traditionally been highly conservative when it comes to outsourcing, preferring to rely on internal IT departments to perform most functions. However, cost pressure in the current environment has driven institutions to consider outsourcing. Although the highly lucrative contracts signed in the dotcom madness have gone for good, IT services vendors can look forward to a continued upsurge in outsourcing.
While the value of this deal is certainly significant, it’s just one of several large outsourcing deals that are in the offering in the banking sector. JP Morgan Chase is expected to announce a far larger deal, worth $8 to $10 billion, over the next few months.
Related research: Datamonitor, IT efficiency in Financial Services: European Financial Services Technology Survey 2002 (DMTC0847)
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