Friends Provident signs £200m outsourcing deal with IBM

Life and p ensions firm Friends Provident is paying IBM £200m over 10 years to manage its IT and provide its infrastructure services.

Life and pensions firm Friends Provident is paying IBM £200m over 10 years to manage its IT and provide its infrastructure services.

The finance firm expects to save £6m a year initially, with more savings to come as the outsourcing contract matures. The contract is part of Friends Provident's overall plan to save£40m a year in operating costs.

The agreement includes all software, hardware and services. It also provides an opportunity to use IBM's cloud computing technology in the future.

Trevor Matthews, CEO of Friends Provident, said, "This is a big step forward in achieving our targeted £40m of annual cost savings by the end of 2009… We will gain access to the latest processing power and the expertise to improve our service and technology further. It sets us up very well for the future and is further evidence of the forward progress we are making."

Phil Morris, European managing director at sourcing consultancy Equaterra, said this deal is typical of deals finance firms are planning as recession approaches. "They are making sure they make the right decisions at the right time."

He said the cloud computing aspect of the deal is interesting, providing an appropriate level of commercial flexibility is included.

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