Update: ING awards $994M in IT outsourcing contracts

Banking and insurance conglomerate ING Group has finalized contracts worth €750 million ($994 million) with a consortium of companies to provide workspace services for its 53,000 employees in Europe.

The contracts with Royal KPN, Getronics, Atos Origin, and Accenture are each for seven years and cover the installation, maintenance and support of desktop PCs, laptops, printers and telephones, the companies said Thursday.

It’s the biggest of three outsourcing deals that ING has finalized recently, worth a combined total of €1.3 billion. They are part of a cost-cutting program announced last November that is designed to save the company €460 million per year, including €230 million from operations and IT.

The program will see 950 workers laid off, while 2,200 employees will be transferred to work at the various outsourcing providers, said ING Group spokesman Nanne Bos.

He characterized the latest deal as a “third generation” outsourcing project, designed to provide ING with more flexibility with its suppliers.

First-generation deals involved outsourcing work to a single provider. Second-generation deals split the work among several providers, but still with one provider playing an important lead role. In this latest deal, no single provider controls a defining part of the contract, making it easier for ING to replace any of them if it is not happy with their work, Bos said.

The contracts were also structured to give the providers an incentive to work well together, by levying penalties and awarding bonuses on the basis of how they perform as a group.

Last year, ING rival ABN AMRO Bank announced that it would outsource its IT operations worldwide in a series of deals worth €1.8 billion over five years. Most of that was awarded to IBM. The deal was notable because several Indian outsourcers were also involved.

KPN took the biggest slice of the latest ING contract. It was awarded €269 million to provide fixed and mobile communications, call center, LAN (local area networking) and conferencing services for staff in the Netherlands and Belgium.

Atos Origin was awarded €216 million to design and manage ING’s back-end office automation, including e-mail and the active directory, and provide related support for end users. Getronics was awarded €213 million for help desk and on-site support for end users, as well as hardware purchasing and asset management. Accenture was awarded €52 million to be the “integrator,” coordinating services and managing the supplier contracts.

When ING announced an initial agreement with the four companies in July it said the contracts would run for five years and be worth about €800 million. It estimated that 550 full-time employees would be transferred to the contractors. That number will now be 430, it said Thursday.

Of the earlier outsourcing contracts, on Nov. 6 ING finalized a six-year, €200 million deal with LogicaCMG for application management, IT maintenance and testing. And on Dec. 6 it signed a seven-year, €350 million contract with the U.K.’s Astron to process its banking and insurance documents.