Insurance giant Zurich strikes a £700m outsourcing deal with CSC

Zurich Financial Services has signed an IT outsourcing deal with Computer Sciences Corporation worth an estimated £700m.

Zurich Financial Services has signed an IT outsourcing deal with Computer Sciences Corporation worth an estimated £700m.

The financial group expects to save about £160m during the seven-year contract, under which CSC will take over the development of new applications and support existing software.

The deal covers Zurich's businesses in the UK, the US, Switzerland and Germany.

CSC will support all insurance lines written by Zurich and all business processes, including new business, underwriting, customer service and claims.

About 1,600 Zurich IT staff from the UK, US and Switzerland are expected to transfer to CSC in the final quarter of this year. Zurich staff in Germany are expected to transfer during the second half of 2005.

The deal between Zurich and CSC highlights the continuing use of large IT outsourcing deals despite criticism from some experts that this type of contract may not be flexible enough to meet changing business needs.

Michael Paravicini, chief information officer at Zurich, said the company would retain control of its business-critical IT systems. He explained that the CSC contract was part of a long-term strategy that had already seen desktops and networks outsourced to different suppliers.

A "certain proportion" of the CSC outsourcing deal would be handled offshore, Paravicini said.

Following a nine-month decline, the number of mega outsourcing deals - valued at £545m or more - is on the rise, according to research published last week by outsourcing advisory firm TPI.

Large IT outsourcing contracts signed this year include a 10-year, £2bn agreement between the BBC and Siemens Business Services; a £400m deal between Barclays and Accenture; and a £600m extension of a contract between Bank of America and EDS.

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