IBM snags $563M services contract

Financial services firm Manulife Financial Corp. has awarded IBM Corp.’s services unit a 10-year, US$563 million outsourcing contract to manage its IT infrastructure in Canada and the United States.

As part of the deal, about 400 Manulife Financial employees will switch over to IBM Global Services, the companies announced Tuesday.

IBM Global Services will manage Manulife Financial’s IT infrastructure, including data centers, voice and data networks, help desks and PCs. The contract applies to Manulife Financial’s IT infrastructure in Canada and the U.S. Toronto-based Manulife Financial also has operations in over 10 other countries and territories, including Japan, Taiwan, Hong Kong, the United Kingdom, Germany and Singapore.

Manulife Financial is outsourcing its IT infrastructure to IBM in order to focus on its core business and to ensure that its IT infrastructure will remain updated and in line with its business strategy, said Howard Sachar, IBM’s manager of insurance research.

The support and delivery of the local area, wide area and metropolitan area networks is being subcontracted by IBM Global Services to Bell Canada’s Bell Nexxia, the companies said.

The companies also announced that Manulife Financial will participate in a new Canada-based IBM research and development facility for the insurance industry. The IBM Insurance Solutions Center’s goal is to speed up the development of IBM and third-party products for insurance companies worldwide by conducting research in “real customer environments,” the companies said. Specifically, IBM is interested in drawing independent software vendors to the center, Sachar said.

The center is expected to launch its operations in the third quarter, Sachar said. Manulife Financial’s participation in the center isn’t part of the outsourcing agreement announced Tuesday, Sachar added. The center will also feature researchers from Ontario’s University of Waterloo, the companies said.

Manulife Financial provides financial, insurance and investment products, such as life and health insurance, pension plans, mortgages and annuities to consumers and businesses. IBM Global Services employs about 150,000 people and generated about $35 billion in revenue in 2001 for Armonk, New York-based IBM. Manulife Financial had revenue of C$16.23 billion in 2001 (US$10.2 billion based on the exchange rate on Dec. 31, 2001, when the company’s fiscal year ended.)