Nearly half of Zurich Financial Services' UK staff are set to
transfer to IBM in a multimillion-pound outsourcing deal.
Nick HuberThe proposed deal, due to be finalised in May, will cover
systems development and support. It is part of a drive to cut costs
and streamline services.
About 800 of Zurich's 1,800 IT staff are expected to transfer to
IBM Global Services and no job losses are expected. The agreement
is Zurich's first major outsourcing deal in the UK.
A spokeswoman for Zurich said that most of its IT staff had a
good idea whether or not they would transfer to IBM under the deal.
She explained that the company wanted to focus on its core
business. "There are a lot of pressures within the financial
services industry for greater efficiency and cutting costs. We are
not a specialist IT company," she said.
However, she said the company has not yet agreed a target for
cost savings under the proposed deal.
Union leaders have backed the agreement amid fears that Zurich
could axe IT jobs in the drive to cut costs. In 1998, Zurich
acquired Allied Dunbar and Eagle Star, which were formerly part of
BAT Industries.
"We were aware that Zurich has had proliferating IT systems and
our greatest fear was that there would be job losses," said Alan
Wood, general secretary of the Union of Finance Staff. "This deal
seems to offer the best of all worlds and staff are comfortable
about moving to IBM."
However, Wood stressed that the terms and conditions of the deal
still had to be negotiated and added that "the devil lay in the
detail".
Analysts said the Zurich deal illustrated the robust growth of
IT outsourcing in the insurance sector.
Last December Liverpool Victoria Friendly Society outsourced its
entire IT infrastructure and services to EDS in a 10-year £200m
contract.
nick.huber@rbi.co.uk