JP Morgan Chase to bring IT back in-house

JP Morgan Chase will bring most of its outsourced IT with IBM back in-house as part of a $58bn (£32bn) acquisition of Bank One.

JP Morgan Chase will bring most of its outsourced IT with IBM back in-house as part of a $58bn (£32bn) acquisition of Bank One.

Last year, JP Morgan Chase transferred management of its data processing infrastructure and about 4,000 IT workers and contractors to IBM under a seven-year, $5bn outsourcing contract which was signed in late 2002. 

But an IT manager at JP Morgan Chase said the bank planned to begin talks aimed at restructuring the agreement with IBM once the financial aspects of the Bank One acquisition are completed next month. 

"IBM will probably hold on to some of the services, but the bulk of the work will be brought back in," the IT manager said. In particular, bank officials may be willing to leave some IT infrastructure-support responsibilities in IBM's hands, he said. 

A consultant who works closely with JP Morgan Chase said he has been told that the bank wants to reclaim all of its network support activities "but allow IBM to continue to manage some of the datacentre infrastructure work" now handled by the company.

Tom Johnson, a spokesman for JP Morgan Chase, said the bank could not comment on future negotiations, however, he did confirm that JP Morgan Chase and Bank One planned to complete the acquisition in July. Merging the operations of the two banks is expected to take until 2007. 

It was unclear whether there is any dissatisfaction among JP Morgan executives about IBM's performance, or if any move to reduce the scope of the outsourcing deal is related only to the Bank One acquisition. But a rethinking of the contract with IBM has been seen as a possibility since the merger plan was announced in January. 

Bank One has brought most of its IT operations back in-house since late 2001 as part of an initiative spearheaded by chief executive officer James Dimon and managed by chief information officer Austin Adams. 

Both Adams and JP Morgan Chase chier information officer John Schmidlin will be members of the combined bank's executive committee.

Thomas Hoffman writes for Computerworld

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