ABN Amro in €1.8bn outsourcing bonanza

Dutch bank ABN Amro is outsourcing its infrastructure and application development in a series of deals, with Accenture, IBM, Infosys, Patni and Tata Consultancy Services (TCS), worth a total of €1.8bn.

The bank is aiming to save around €258m per year through the deals and is slashing its full-time headcount from 5,000 staff to 1,800 with around 2,000 transferring across to the IT outsourcers.

IBM has the biggest chunk of the deals with a five-year contract worth €1.5bn to take over the running of ABN Amro's desktops, servers and storage, and some application development.

Offshore outsourcing will also be key to the bank achieving the IT savings, and Indian IT services companies Infosys and TCS will be responsible for both application support and enhancement. Accenture will work with all the other four outsourcers on more strategic application development work.

ABN Amro already has a €1.5bn desktop outsourcing deal with EDS for the bank's wholesale operations and this is unaffected by these new contract announcements.

Lars Gustavsson, CIO at ABN Amro, said the bank is confident of being able to manage all the different parties and achieve the stated cost savings target.

"One size doesn't fit all. There is simply no single vendor who can satisfy all the needs of the bank and we also wanted to go into direct offshoring," he said in a conference call.

Samad Masood, analyst at Ovum, said in a research note that the deals are a strong endorsement of the expertise and value of the offshore Indian outsourcers.

"TCS and Infosys have both claimed that these are their largest contracts to date - very impressive given that it's a continental European and not a US or UK client. ABN Amro joins other European banks including ING, BNP Paribas and Societe Generale who now source IT expertise from India," he said.