Scotiabank hires IBM in major deal

Scotiabank, based in Toronto, has hired IBM Canada Ltd. in an outsourcing deal worth $900 million over seven years that will have IBM Canada Global Services manage the bank’s domestic computer operations, including data centres, branches, automated teller machines and desktop PCs of 24,000 employees.

Said by IBM and Scotiabank to be the first of its kind for a major Canadian bank, the deal takes effect May 1. It is one of the largest deals thus far for IBM Canada Global Services, said Rick Horton, general manager of that group.

The bank has two primary data centres in the Toronto area, where mainframes and servers are located, 1,100 branches across Canada, 2,100 automated teller machines and some five million customers. The bank has operations in 52 countries with about 52,000 employees worldwide, said Peggy Mulligan, the bank’s executive vice-president for systems and operations.

About 450 Toronto-based Scotiabank employees will lose their jobs with the bank, but will be offered jobs with IBM that are at least equivalent to their existing positions – an aspect of the deal that IBM found particularly attractive as a way to pick up IT pros with financial services background, Horton said.

Many of the 450 will work on the Scotiabank project, he said, adding, “we’re happy to get them.”

Scotiabank spent “an extremely intense period of due diligence” lasting about eight months searching for the right vendor to handle the outsourcing, Mullligan said. IBM emerged because of the company’s overall competitiveness, breadth of experience and range of specialists it offered for the project, she said.

The bank decided to outsource key IT functions because “we really want to focus on our core business, which is delivering financial services,” Mulligan said.

– IDG News Service