Bank One Corp. announced that it’s planning the largest IT employee hiring spree in its history in an effort to speed up and expand internal technology projects aimed at moving the US$270-billion bank holding company away from outsourcing initiatives.
Chicago-based Bank One said it plans to add 600 IT workers during the next three months, which would boost the size of its 4,000-person technology department by 15 per cent. The hiring will be done at its facilities in Chicago and Columbus, Ohio, and will include positions such as IT project managers, senior engineering managers, systems architects and Web developers.
“We need additional talent because we must integrate increasingly sophisticated systems without any customer disruption,” Bank One CIO Austin Adams said in a statement. A spokesman added that expanding the company’s in-house team is expected to be “more cost-effective” than further outsourcing would be. It also should eventually create a greater historical knowledge of Bank One’s IT infrastructure, the spokesman said.
A new senior management team at Bank One, which lost US$511 million last year, has been working for nearly two years to improve the company’s financial situation and assimilate the IT systems of several smaller banks that it took over through acquisitions. Part of that effort was an attempt last summer to renegotiate a massive outsourcing deal with AT&T Corp. and IBM Corp., although the outcome of those talks is uncertain.
The so-called Technology One Alliance – a six-year, US$1.4-billion deal signed in September 1998 – has cost Bank One more money than originally thought, according to sources inside the company. The agreement also hasn’t meshed well with all the changes the bank has undergone since the contracts with AT&T and IBM were originally signed, they added.
In addition, Bank One has gone through a major IT management shake-up following the appointment of Jamie Dixon as CEO early last year. Adams took over as CIO last March, and the company has also hired two former corporate CIOs: Maureen Osborne, formerly of Heller Financial Inc., took over as chief technology officer for middle-market banking and treasury management, and James Ditmore, who had been at Ameritrade Holding Corp., was brought in to oversee infrastructure and operations technology.
Bank One is moving from a half-dozen online customer service platforms that are now maintained through outsourcing agreements to a single proprietary system, according to its spokesman. The online system, dubbed Bank One’s Best, will let customers view account information and make deposits and money transfers. Moving to a single platform will provide “a comprehensive national view of customer and product relationships,” Bank One said.
The new hiring plans are meant to accelerate the conversion schedule, the spokesman added. “We want to get onto one common system by 2002,” he said. “We just completed two conversions and next year plan to accomplish [three] additional major system conversions.”
Even with the hiring, he said, Bank One expects its IT budget to remain flat from this year to next because of cost savings related to conversions from outsourcing to in-house systems. The company currently spends about US$2 billion annually on technology.
The move away from outsourcing didn’t surprise Rod Hall, vice-president of consulting services at Compass America Inc. in Chicago, which advises Bank One.
“It feels like a pendulum to me,” Hall said. “A large number of financial service organizations that outsourced five or six years ago are now saying, ‘It’s not what we expected it to be.’ What we’ve seen in the last couple of years is that they’ve systematically brought those projects back in-house.”
Hall said another good example of the shift is UBS Warburg LLC, which outsourced most of its IT infrastructure to Perot Systems Corp. and is now bringing systems back under its own control. The problem, he added, is that financial services firms normally don’t have a good handle on the size of their IT infrastructures or the speed at which their need for technology resources grows, leading to contract cost increases by outsourcers.
Reporter Kim S. Nash contributed to this story.