Barclays cans IBM outsourcing plan

Barclays Bank has dropped controversial plans for an estimated £100m-a-year IT outsourcing deal with IBM Global Services.

The deal for the bank's infrastructure support, codenamed 'Project Tapestry', would initially have involved the transfer of approximately 1,000 staff from its 'Enable' IT division to IBM, according to a union newsletter obtained by vnunet.com.

"The possible outsourcing to IBM has been shelved - if not indefinitely, then at least until 2004," the document states.

Barclays confirmed that it had been in talks with IBM as part of regular reviews of IT functions, and said its decision not to outsource "may be revisited".

"We were looking at Enable's IT infrastructure services in conjunction with IBM," a spokeswoman for Barclays said.

"But the decision was taken to keep these services in-house primarily because they were in a strong position and had outperformed expectations in 2002."

Barclays has been reviewing the efficiency of all its IT functions with a view to outsourcing or launching joint ventures as part of plans announced in 2000 to double profits in three years through a "transformation" of business-wide processes.

A separate desktop services deal with EDS, involving around 100 IT jobs at the bank, is still on the table, however, and a contract is expected to be signed in the next month or so.

Financial services union Unifi, which represents two-thirds of the 9,000 staff at Enable, told vnunet.com that the cancellation of IBM talks was a relief but that uncertainty remained among staff.

"We anticipate that there will be further outsourcing," said Keith Brookes, national secretary at Unifi.

"We do have a partnership agreement with Barclays, so sharing information with us is better than just arriving at decisions and keeping us in the dark. But it doesn't take away the edge of uncertainty in this period of change."

IBM refused to comment on the nature of any discussions with Barclays.

Barclays already has existing agreements for some back-office functions with suppliers including Siemens, and the IBM and EDS talks indicate that any major IT outsourcing at the bank will follow the trend for 'multi-sourcing' rather than one 'megadeal'.

"There is going to be an increased amount of financial services outsourcing," predicted Richard Holway, IT services analyst at Ovum Holway.

"If you look at the Royal Mail Fusion Alliance, the Inland Revenue Aspire deal and what [IT director general] Richard Granger is doing with the NHS, there is a strong possibility that multi-sourcing will be the name of the game in the future. But it has to have strong programme management."