IT outsourcing begins in banking

A new chapter on infrastructure outsourcing by India Inc was written recently

with Bank of India outsourcing the implementation and management of its core

banking solution to HP.

An agreement for a 10-year outsourcing contract valued over $150 million was

inked between M Venugopalan, Chairman & Managing Director, Bank of India (BoI)

and Balu Doraisamy, President, HP India. The agreement envisages that HP would

implement and manage the Infosys Finacle core application solution across 750

BoI branches.

In addition to the core banking solution, HP would manage all IT assets and

network infrastructure across all these 750 branches. It would also implement

and manage a data warehousing and document imaging solution, provide integrated

channel management including tele banking, Internet banking and ATM as well as

build and manage a data center, DR site, help desk and call center.

Though at $150 million, this might be one of the largest BFSI

infrastructure-outsourcing contracts in the entire Asia-Pacific, Venugopalan is

confident about an immediate RoI, primarily because he feels that the new

arrangement would facilitate new client acquisition.

Off late, there has been a spate of similar large infrastructure outsourcing

contracts with Indian enterprises. Telecom major Bharti Televentures has

recently outsourced the management of its Airtel cellular network to Ericsson

for $400 million.

Even other leading Indian enterprises like Hindustan Lever, Ashok Leyland and

Tata Steel have outsourced their infrastructure implementation to third party

vendors. If the BoI-HP arrangement meets with success, there is a strong

possibility of more and more banks entering into similar contracts.

Both HP Services and IBM Global Services are currently looking at

infrastructure outsourcing as a lucrative avenue of business. While HP’s

strategy is based on the Adaptive Enterprise Management framework built around

its Openview solution, IBM’s offerings are based on its Universal Management

Infrastructure (UMI) under Project Symphony.