Why is Barclays cutting IT suppliers and moving work in-house?

Barclays’ decision to end supplier contracts and take two IT functions in-house is an interesting one. Why has Barclays taken this route?

Last month Barclays decided to end a desktop management contract with Getronics and take it back in-house. The bank then decided not to renew a six year contract with Accenture. The contract included application development and support for UK banking systems.

One CIO told me that banks are always looking at the numbers and if outsourcing contracts get more expensive over time they may in fact be cheaper to in-source.

While this is true for many contracts it could not have been the case for the Getronics contact. A source of mine tells me there is no way Barclays would get a cheaper deal. Getronics was apparently 15.8% cheaper than its predecessor on the contract which was EDS.

Another contact said the financial trouble that Getronics found itself in 2007 before it was taken over by KPN could be one of the reasons for the Barclays decision. He questioned: “Is this the fiurst of many of the Getronics clients that change suppliers?”