Barclays ponders offshore outsourcing apps development

Barclays is considering a major outsourcing deal which could see key parts of the bank's IT operations move offshore and affect...

Barclays is considering a major outsourcing deal which could see key parts of the bank's IT operations move offshore and affect up to 1,700 UK jobs.

The bank is discussing with suppliers the possibility of outsourcing its “Build Services”, the application development section of the Barclays Group IT department.

Analysts estimate that the deal could be worth hundreds of millions of pounds over the lifetime of the contract.

Barclays said outsourcing Build Services was one option in an ongoing review of IT operations. Other options being considered are retaining the service in-house or running it as a joint venture with a supplier.

A Barclay’s spokeswoman said the review of Build Services was in its early stages and that a final decision would be taken in the fourth quarter of this year.

The bank declined would not give a figure on the number of staff that could be affected but is consulting with staff and unions on the issue.

Banking union Unifi has raised concerns about the possibility of job losses. It believes that 1,750 jobs could be affected by a possible outsourcing deal, and is consulting its members about their readiness to take industrial action over compulsory redundancies if an agreement is not reached.

“This is an alarm call for IT [staff] in the finance sector,” said Keith Brookes, national secretary of Unifi. “These are highly skilled jobs. If one financial institution is willing to consider it [offshore outsourcing], no doubt others will.”

Analysts estimated that an outsourcing deal involving Barclay’s application development division could be worth around £100m a year.

Adam Hill, lead analyst at Datamonitor, said that outsourcing application development was unusual in the European banking industry, partly because it has been viewed as more of a strategic part of the business than IT infrastructure. However, the option of cutting costs by moving development offshore is likely to prove tempting to banks, he added.

“For every big financial institution a key question for the CIO is what they do around offshore development,” he said.

Earlier this year Barclays handed over the management of its 42,000 desktops to EDS in a deal worth $350m (£214m).

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