Westpac is currently finalising negotiations with IBM GSA and Telstra, with the aim of completion by the end of November.

The ten year contract with IBM GSA will see the outsourcing of mainframe and mid-range computing and desktop services, while IT systems development, strategy and architecture will remain in-house. The five year agreement with Telstra will cover IT networks and telecommunications services. The total value of both the IT and telecommunication components is approximately A$4.3 billion.

Westpac's managing director, David Morgan says: "The outsourcing of the IT infrastructure and operations will result in significant cost reductions by accessing the greater scale efficiencies of IBM Global Services and Telstra while achieving day-to-day performance improvement, including adopting standard platforms, processes and infrastructure."

Westpac expects the agreement to deliver efficiency benefits of between 15 and 20 per cent on the existing costs of these outsourced functions. Some of these savings will be reinvested to accelerate the roll-out of e-initiatives.

Under the agreement, all 1200 affected IT staff in Australia, New Zealand and the Pacific Regional Bank will be offered positions with IBM GSA / Telstra.

"With the convergence of technology and communications it is no longer possible for a single financial institution to keep up with the latest developments. We can now draw on the global resources of IBM and Telstra," says Jeremy Gross, Westpac's group executive, technology, operations and e-commerce. "The partnership between Westpac and IBM GSA/Telstra is also a key step in our move towards an e-business focus by enabling Westpac to leverage the infrastructure, scale and research and development capabilities of global IT and telecommunication providers."

IBM GSA is a joint venture between IBM Australia, Telstra and Lend Lease, employing more than 10,000 IT professionals across Australia and the Asia Pacific.