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IBM, others share mega banking deal

ABN Amro Bank awards services contracts to IBM, Infosys, Tata Consultancy and others in deals totaling more than $2.2 billion.

ABN Amro Bank on Thursday announced information technology services deals totaling $2.2 billion with five companies.

Under the five-year deal, IBM will take over management of most of the Dutch bank's servers, storage systems, desktops, printers and personal digital assistants globally, while Indian IT companies Infosys and Tata Consultancy Services will provide application support, the bank said.

In addition, the three companies will be preferred suppliers for application development, along with Accenture and another Indian software services company, Patni Computer Systems. Electronic Data Systems will continue to look after the IT infrastructure of ABN Amro's business unit wholesale clients under an outsourcing deal signed in 2003.

The Dutch bank said the deals will result in in-house consolidation, partial outsourcing of IT services, and savings worth $738 million from 2007 onwards. About 2,000 ABN workers will be transferred to outsourcing partners, with IBM taking on the majority. However, 1,500 employees will lose their jobs over the next 18 months, ABN said. The bank's systems are located in three main data centers--in the Netherlands, Chicago and Sao Paolo, Brazil--and in some smaller centers.

"The agreements with selected vendors allow us to utilize the latest technology to further improve the services we offer our clients," Hugh Scott-Barrett, chief operating officer of the bank, said in a statement. "We expect that this IT program that is shared across the group will contribute to the savings in line with earlier estimates made by the bank, while improving IT services within the group."

IBM, which won the biggest portion of the ABN Amro deal, said its contract is worth about $1.8 billion. Big Blue said it will deploy its "universal management infrastructure" program to standardize the bank's IT infrastructure and set up an innovation center to develop and support new financial products.

Tata Consultancy has been awarded about $247 million worth of work under the contract, which makes it about twice as big as the company's previous largest contracts.

"This is the largest deal any Indian company has signed," N. Chandrasekaran, head of global operations at TCS, said in an interview. "This is going to validate our global delivery model."

Although IBM won the lion's share of the contract, the deal in some ways helps inch forward a looming competitive battle between consulting and services specialists in the U.S. and Europe, such as IBM and Accenture, and Indian services companies. The western companies, long specialists in strategic reports and complex technological deployments, are adding application support to their offerings.

Conversely, Indian companies are moving into consulting and application development.

"Customers no longer differentiate between the integrators and us. The field has opened up," Chandrasekaran said.

CNET's Michael Kanellos contributed to this report.