Posts Tagged ‘Westpac’

Infy, HCL in race for Westpac’s $500-mn outsourcing contract

December 18th, 2009

Australia’s second-biggest bank Westpac is seeking outsourcing suppliers for contracts worth up to $500 million, with India’s top tech firms Infosys, HCL and others bidding against multinational rivals IBM and HP-EDS.

The bank, which is currently merging its systems with St George Bank, is being advised by a consulting firm on fleshing out an IT transformation programme, aimed at saving over $400 million from operations by 2011.

Australia’s top banks including Westpac, National Australia Bank (NAB), Commonwealth Bank of Australia and ANZ will invest almost $4 billion on technology this year, according to experts tracking the industry. The country’s IT market is worth around $39 billion, according to research firm Forrester.

“HCL, Infosys and Wipro, apart from IBM, are already in discussions with Westpac for these contracts — offshoring being considered as a critical portion of these engagements,” said a senior executive at one of the top tech firms exploring this opportunity. He requested anonymity because he is not authorised to comment on any potential business.

For Indian vendors, Westpac contract offers an opportunity to gain business from IBM, which is due to renew its contract with the bank next year. While Infosys declined to offer any comments because of its ‘financial silence period’, officials at HCL did not respond to an email query sent by ET on Thursday. Westpac officials, too, did not respond to the ET query.

Westpac, which acquired St George Bank last year for $19 billion, wants to have a common general ledger and consolidate other systems, including payroll. The IT integration costs alone will be around $338 million, apart from an additional $168 million being earmarked towards outsourcing and restructuring.

“Apart from the integration with St George, Westpac is also seeking suppliers for over $250-million application development and maintenance contract,” a consultant said.

Source: http://economictimes.indiatimes.com/infotech/ites/Infy-HCL-in-race-for-Westpacs-500-mn-outsourcing-contract/articleshow/5349895.cms

IBM looks on as Westpac’s Kelly says mega outsourcing trend is shifting

November 5th, 2009

Westpac CEO Gail Kelly has broadly hinted that the bank is unlikely to renew its decade-long IT outsourcing deal with IBM, as banks move away from all-in-one mega deals to more tactical best-of-breed outsourcing arrangements.
Speaking to analysts after the presentation of the Australian bank’s financial results, Kelly suggested that the banking industry’s fixation with mega outsourcing deals was drawing to a close.

“Ten years ago there were a number of large institutions that went for the all-in outsourcing arrangement, but I think that the models have changed,” she said. “I think one is much more likely to look at the different elements and make sure you have the right partner for all the elements; your desktop may be a different solution to your main frame for example.”

The switch in emphasis implies a rethink of the bank’s ten-year multi-billion dollar deal with IBM, which entailed the outsourcing of mainframe and mid-range computing and desktop services in 2000 and is due to expire next year.

Westpac is currently working through a A$700 million programme to integrate its operations with recently-acquired St George Bank. Of the $392 million so far spent on the project, $146 million was spent on IT systems and operations, with a further $103 million attributed to restructuring and outsourcing.

Kelly said that the bank will continue to lean on a mix of outsourcing and offshoring as it completes the integration project: “With the very significant program of work we’ve got on our agenda of the next few years with regards to technology we could not possibly actually source all the skills we need right here so it makes sense for us to leverage skills as they exist elsewhere; perhaps with IBM themselves and maybe with developers elsewhere.”

Source:http://www.finextra.com/fullstory.asp?id=20700

Westpac CEO hints at non-renewal of IBM outsourcing contract

November 4th, 2009

Westpac CEO Gail Kelly has suggested the bank is likely to choose not to renew its decade long outsourcing relationship with IBM, due to expire next year, in line with a trend to move away from decade long all-of-IT approaches to sourcing.

Speaking at a media conference following the announcement of the bank’s full year financial results, Kelly said that mainstream opinion on IT outsourcing models was swinging back from decade-long mega-deals toward a best-of-breed approach.

“Ten years ago there were a number of large institutions that went for the all in outsourcing arrangement, but I think that the models have changed,” she said. “I think one is much more likely to look at the different elements and make sure you have the right partner for all the elements – your desktop may be a different solution to your main frame for example.

“But, we have a good relationship with IBM and [CIO] Bob McKinnon and his team have been working extensively on that relationship with IBM and its been very healthy over the course of this year so I feel comfortable with that.”

Kelly also suggested that the bank would increasingly look to offshoring to meet its IT skills and services needs as the bank works through its St George integration and IT transformation.

“With the very significant program of work we’ve got on our agenda of the next few years with regards to technology we could not possibly actually source all the skills we need right here so it makes sense for us to leverage skills as they exist elsewhere – perhaps with IBM themselves and maybe with developers elsewhere…”

The speculation over whether the bank will renew its relationship with IBM goes back years, with the architect of the deal – then CIO Mary Ann Maxwel debating in 2007 whether the contract would be re-signed.

At the time, Maxwell said it was not surprising that the big banks were increasingly comfortable with managing more sophisticated outsourcing and multi-sourcing relationships.

Kelly’s comments follow the announcement of the bank’s full year financial results to 30 September 2009 which saw the bank report a statutory net profit of $3,446m, down 11 per cent on the previous financial year; it also reported an economic profit of $2,094m, down 25 per cent.

Speaking at the presentation of the results, Westpac CFO Phil Coffey said the year had seen significant investment in the reliability, capacity and service of the bank’s IT including rolling out 12,000 PCs and upgrading its network to Telstra’s NextG network.

The bank also reported that its integration with St George was progressing with $392m being spent up to 30 September 2009 out of an overall integration budget of $700m.

Of the $392m total, $146m had been spent on IT, systems and operation, $103 million on restructuring and outsourcing, and $74 million on program governance and strategy development. A further $54m had been spent on transaction costs and stamp duty, and $15m on revenue and retention investment.

The bank also reported that expense synergies for the year to September 30 had reached $143m – 19 per cent ahead of initial estimates.

This had been achieved through the reduction of 1,275 permanent and contractor roles, saving $99m. Through rationalizing sourcing arrangements and areas of duplication the bank had further $44.

In June the bank said it was pushing ahead with core changes to its mammoth transformation project set to slash reporting times and balance financial control following its merger with St George.In May the bank said it would derive much of its future IT innovation and costs savings from a cross pollination of IT systems between itself and St George, which was acquired by the bank last year.

Source:http://www.computerworld.com.au/article/324985/westpac_ceo_hints_non-renewal_ibm_outsourcing_contract

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