UK stockbroking firm Cazenove is terminating a 10-year IT outsourcing deal with IBM with seven years still left to run on the contract.
Cazenove outsourced its internal IT operations to IBM in 1999, under an agreement described at the time as the largest of its kind in the UK. The value of the deal was estimated at £100 million over the lifespan of the contract, and entailed the transfer of 30% of Cazenove's IT operations to IBM.
The broker is now looking to repatriate some of its original IT staff from IBM as it prepares to rebuild its own inhouse operations ahead of a planned IPO within the next year. IBM says the contract has been renegotiated to accommodate Cazenove's migration to a new greenfield headquarters site in London. The vendor says it hopes to pick up new business from the firm for provision of services, hardware and software for its new infrastructure.
A spokesperson for IBM rejects suggestions that Cazenove was dissatisfied with the levels of service its received under the outsourcing deal. "We received a bonus under our contractual arrangements for exceeding our business requirements at Cazenove over the past three months," he says.
News of the contract termination completes a topsy-turvy month for IBM's outsourcing business. It comes a month after Bank of Scotland ripped up a similar 10-year deal with IBM following its merger with Halifax, and two weeks after Deutsche Bank entered exclusive negotiations with the vendor to outsource the operation of its computer centres in continental Europe.