IBM wins $5bn JP Morgan outsourcing deal
Staff transfers etc.
IBM Corp used the quiet of the holiday season to finalize contract details on its $5bn seven-year infrastructure outsourcing deal with investment bank JP Morgan Chase & Co, which is said to be the largest of its kind and bigger than an earlier $4bn win for IBM with American Express.
The agreement signed with the investment bank will see IBM Global Services take over a number of mainframe data and help desks centers, distributed computing infrastructure, data and voice networks, and some 4,000 JPM staff and contractors.
Thomas Ketchum, vice chairman for JP Morgan Chase said the move would see IBM deliver various computing capabilities "on demand" across its retail banking, mortgages, trading and securities processing divisions. He said that this is expected to lead to absolute costs savings, increased cost variability, and improvements in service levels.
This is not the first time JP Morgan has made headline news over its outsourcing arrangements. An earlier complex deal squared up a quartet of Andersen Consulting, AT&T, Bell Atlantic Corp and CSC as IT and telecommunications partners in a $2bn, seven-year agreement, which supposedly went on to produce 15% savings in IT costs.
As part of this latest deal, IBM Global Services is pushing the notion of Utility Management Infrastructure, a proposal to tie together disparate servers and storage systems and different brands of devices without requiring new applications to be written for each separate system.
IBM GS beat off competition from rival EDS Corp, which this week responded with news of its own, when it confirmed it had clinched a deal with ABN AMRO Holding NV over an IT outsourcing contract for ABN AMRO's London-based Wholesale Client business unit that provides financial services to corporate and institutional clients. That deal is being valued at 1.3bn euros ($1.3bn) based on a five-year period. Approximately 1,000 staff are expected to transfer over to the outsourcing company