Why Lloyds Bank is 'outsourcing' IT services to IBM
- U.K.-based Lloyds Banking Group plans to move almost 2,000 staff members to IBM as part of a £1.3 ($1.59) billion, seven year IT outsourcing deal, the Lloyds Trade Union announced this week.
- Staff will be outsourced to IBM, and then over a four-year period the work will be "offshored," The Stack reports. Though 1,961 staff members — including permanent staff, third parties and contractors — will transfer to IBM, after four years, just 193 staff members will remain working on the Lloyds contract.
- Through the deal, Lloyds is looking to save £760 ($938) million in costs, make IT more agile and streamline the business, according to The Stack.
Earlier this year Lloyds suffered a distributed denial of service (DDoS) attack that caused the bank to shut down for two days. Though the bank said no accounts were compromised, it was certainly a wake-up call. Cyberattacks are a huge risk to the finance industry, and concerns have been growing significantly in the wake of attacks and near-misses.
The deal will start by outsourcing staff to IBM, in what is basically an "as a Service" model. Outsourcing IT labor no longer means companies are simply going to bring in foreign labor to do technology work at a cheaper rater.
Rather the outsourcing model is being turned on its head as companies rely on as a Service models, creating an entire spectrum of outsourcing. On one end, it's labor arbitrage. On the other end, it's a software or infrastructure-driven model that is far more sustainable and profitable. In this case, relying on IBM's networks with its vast pool of resources can also increase security and systems reliability.