Bank of Scotland said this week it would save £60m over the next five years after awarding a £190m extension to its outsourcing contract with First Banking Systems.
First Banking Systems, a joint venture between the bank and IT services company FI Group, plans to deliver some of the savings by outsourcing software development work to India.
The venture, which was formed two years ago, transformed the bank's IT department from a cost centre to a profit centre within its first year.
FBS has introduced new services, made efficiency savings and begun serving new customers within the bank.
"We have created a ground-breaking service and established high performance e-business and business change management centres," said Gavin Masterton, managing director of the bank.
Over the past two years FBS has been involved in more than 150 IT projects. They include managing year 2000 work, developing an Internet mortgage site in the Netherlands and credit card processing projects.
Bank of Scotland declined to say how the efficiency savings would be achieved, but indicated that the joint venture would make use of FI's offshore service, IIS Infotech, based in India.
FBS is 51% owned by Bank of Scotland and 49% owned by the FI Group.