J.P. Morgan Chase & Co. announced Monday that it has awarded IBM Corp. a seven-year outsourcing contract worth over US$5 billion, a move the bank expects will reduce its costs and improve its IT infrastructure and services.
The announcement had been expected, since IBM acknowledged to the Wall Street Journal in mid-November that it had entered into final negotiations with J.P. Morgan for this contract. Back then, the Journal also reported that IBM rival Electronic Data Systems Corp. (EDS) had been vying for this contract.
The deal calls for IBM to take over a “significant portion” of the bank’s data processing IT operations, such as data centres, help desks, data networks and voice networks. Moreover, about 4,000 bank employees and contractors will move over to IBM in the first half of 2003. Selected resources and systems will also be transferred to IBM, J.P. Morgan said.
As part of the deal, IBM will use as an underlying core technology its Utility Management Infrastructure, which through its open-standards software will be used to link disparate back-end systems, such as servers and storage devices, and to improve the security and reliability of the bank’s IT infrastructure.
Among the IT tasks that J.P. Morgan will retain in-house are the delivery and development of applications and support for desktop systems.
J.P. Morgan, in New York, provides a variety of financial services in over 50 countries, including investment banking, asset management, retail banking and private banking. It has assets of $742 billion and over 30 million consumer customers.