EDS Abbey flagship project in doubt

Exclusive Abbey, the UK retail bank, is keen to get out of its outsourcing contract with EDS, according to a confidential presentation seen by The Register. EDS is considering offshoring the project to try and save it and as many as 500 UK jobs could be lost as a result.

The joint venture, valued at $390m, was hailed as the future of outsourcing when it was signed in May 2001. It gave EDS responsibilty for all back office mortage and lending processes. At the time more than 1,500 Abbey staff joined EDS.

The document, from EDS and marked "confidential", says:

Abbey sees the existing contract with EDS (specifically its inability to terminate for convenience) as a major barrier to fulfilling its strategic objectives - we believe these to include the sale of the Bank;

Abbey perceives very poor value for money (incorrect) and poor delivery of the original Crystal transformation programme (some justification);

Abbey wants EDS out altogether but is constrained by the existing contract

EDS wants to save the contract by offering more flexibility and big cost savings by offshoring much of the work. If it goes ahead this will lead to the closure of EDS's Solent office and the loss of 500 jobs.

The documents note that Department of Trade and Industry export approval may be required before the offshoring takes place. EDS will also have to ensure that Data Protection and Financial Services Act regulations are followed.

Business processes will be re-engineered before they are sent offshore.

EDS will recruit more staff for its centre in Pune and is considering opening a business continuity centre in Mumbai (formerly Bombay).

EDS refused to comment on the leak but gave The Reg a statement: "Abbey is currently undertaking a review of all its operational sites as part of an ongoing programme to streamline the business. The aim is to achieve cost savings through improvements such as reducing duplication of roles, transferring work from smaller centres to larger sites and off shoring some operations.

As part of this ongoing programme, Abbey and its joint venture partner EDS, are reviewing existing mortgage operations. The review is looking at a range of options and Abbey and EDS are working closely together to find the best way to meet the needs and expectations of Abbey’s customers.

A spokesman for Abbey said: "We are reviewing our relationship with EDS and until conclusions are reached, and staff are informed, we have no other comment to make."

Abbey shares rose 2.5 per cent today following stories in the weekend papers that Spanish bank Banco Santander is interested in buying the High Street lender. ®

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