Is there a global trend toward out-tasking — turning over a specific information technology operation to another organization, rather than the entire IT function — in banking?
Celent analyst Stephen Greer thinks so. "The key driver has been the economic climate," he says. "More banks have been looking at ways to cut costs and have been moving beyond simple back-office tasks and into more advanced business processes."
Although he expects most back-office/call center work to continue to be done through long-term outsourcing deals, Greer sees out-tasking as "a way to explore new processes in a conservative, incremental way that allows for substantial control by the institution."
Bank Austria signed a five-year out-tasking deal with International Business Machines this summer. The bank is easing its way into a core banking system migration by outsourcing the application developers that had been maintaining its legacy core apps.
Bank Austria IT staff who modify and maintain the bank's core applications would under normal circumstances see their jobs phased out as the bank migrates to the EuroSIG platform developed by the bank's holding company, UniCredit, and used by sister banks in Italy and Germany. But under the arrangement with IBM, 300 of the bank's 900 IT employees have gone to the IBM subsidiary BlueIT, which has set up a banking solutions center in Vienna.
"Those people have been shifted to IBM for the time being to serve us until the applications they support are replaced by group applications," says Herbert Hangel, head of global banking services at Bank Austria. "As soon as we no longer need them, these IT people will be redeployed by IBM to help other customers."
This story originally appeared on Bank Technology News.
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