IBM scores huge outsourcing deal with Lloyds

ibm-officeBiggish Blue has scored a $1.6 billion outsourcing deal with Lloyds Banking Group, but that is not great news for its IT staff.

Under the deal, IBM would pay Lloyds for its data centre assets and in return will charge the bank for ongoing management.

Lloyds plans to move almost 2,000 members of staff to IBM as part of the IT outsourcing deal in the hope that the seven-year deal will save the bank close to $930 million in costs, streamline the business and make its IT services more agile.

Lloyds Trade Union (LTU), which represents around 35,000 members of staff has now found itself “derecognised” by the bank. It fears that once the deal is signed the jobs would be “offshored” over a four-year period and most of the 1,961 positions will be cut.

1,961 staff will be transferred to IBM including permanent staff, contractors, third parties and offshore suppliers. However after four years, only 193 of the staff transferred to IBM will still be working on the LBG contract,” the LTU claimed.

It does sound like a rather old-fashioned outsourcing deal, which while being popular in the 1990s and early part of 2000s fell from favour when the savings proved to be less than expected and off-shore staffing of IT departments less efficient than traditional employees.