KUHN CAPITAL Sunday, February 25, 2018
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IT Outsourcers Grow, ABN Amro Shrinks


Dutch bank ABN Amro announced today that it had entered into one of the biggest IT outsourcing contracts ever. Value: about $2.25B.

Tata, Indiaís dominant IT services vendor, picked up a chunk of the contractís software support and enhancement services component worth about $250M over five years.

Other vendors participating were Infosys, Patni, IBM and Accenture. Infosys will share software support responsibilities with Tata while IBM will take on IT infrastructure work, and all five will engage in applications development. ABN expects to save about $315M per year with the move.

In a related development, ABN also announced today that it will terminate about 1,500 IT workers, 500 of them in the Netherlands with the remainder in Chicago and Sao Paolo. An additional 2,000 employees will have the option of joining one of the outsourcing firms, typically IBM. Given that ABN currently employs 5,000 in IT, these staff reductions represent a 70% cut.

Short-term pain for what ABN -- in a bold stroke -- believes is long-term gain.

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