Westpac sees the outsourcing light

Westpac sees the outsourcing light

Westpac plans to join its competitor, the Commonwealth Bank of Australia, in outsourcing its IT and telecommunications infrastructure, an announcement from the company said last week.

The bank has released a Request for Proposal to manage its core banking technology operations, including its mainframe and mid-range computers, PCs, networks and telco requirements in Australia, New Zealand and for its Pacific Regional Banking section. Systems development, strategy and architecture would remain in-house, Westpac officials said.

CSC, EDS and IBM GSA, along with a number of smaller telcos and managed network service providers, have been invited to respond to the request.

Westpac officials expect the feasibility and tendering process to take up to 15 months. Up to 1000 Westpac staff would be affected by the outsourcing, with the bulk of them expected to be employed by the successful tenderer, Westpac said.

The Commonwealth Bank outsourced its IT infrastructure to EDS in a 10-year, $5 billion deal in September 1997.

A spokesperson for EDS said it is still too early to comment on the call for expressions of interest by the bank but didn't think its arrangement with CBA would be a hindrance to its chances. Instead, it firmly believes vast global experience in the banking and financial institutions market is one of the main reasons Westpac would have short-listed it.

Reduced costs and operating efficiencies are at the core of what Westpac hopes to achieve from the move, according to Jeremy Gross, Westpac's group executive, technology and operations.

`We believe that we could achieve significant economies of scale in outsourcing our IT operational processes,' Gross said. `This would also allow us to sharpen our focus on rapidly deploying e-Business-enabled products and services to our customers.'

Needing a global partner means only three organisations - CSC, EDS and IBM GSA - will really get a look in at the mainframe and mid-range computing, PCs and IT networks side of the deal while several other players will vie for the telco side.

Westpac said it expected to relocate all of the 1000 staff it estimated would be affected by the transition should it go ahead, either with the new technology partner involved or elsewhere within its own organisation.

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