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March 13, 2017updated 26 Apr 2019 3:54pm

IBM, Lloyds £1.3bn IT outsourcing deal to see 1900 staff moved to Big Blue

Deal has drawn criticism from trade unions amid concerns over mass layoffs and cyber security.

By Ellie Burns

IBM and Lloyds Banking Group are on the verge of signing a £1.3bn contract which will see the banking giant outsource many of its computer systems and more than 1,900 jobs to Big Blue.

In a seven-year deal which has raised opposition from trade unions, the bank hopes to cut almost £760m in costs while making the bank more technologically agile and responsive.

The deal has been met with opposition from Lloyds Trade Union (LTU), which told its 35,000 members in a newsletter that staff outsourced to IBM would ultimately be laid off within four years and replaced by offshore workers.

“1,961 staff will be transferred to IBM including permanent staff, contractors, 3rd parties and offshore suppliers. However after 4 years, only 193 of the staff transferred to IBM will be still be working on the LBG contract,” the union said in a newsletter.

The union, which is no longer recognised by the bank, also cited a presentation by Lloyds’ CIO Morteza Mahjour and said that 1,961 staff would be transferred to IBM, with the majority coming from the bank’s data centres in West Yorkshire and Edinburgh. The union went on to say that the transfer of staff had been agreed by Accord and Unite, the in-house staff unions.

The deal also raises concerns regarding cyber security, with the bank having been previously hit with a denial of service attack in January. The attack left many customers unable to use services, with the deal with IBM raising, according to the union, internal concerns about the weakening of security controls.

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“One of the reasons the deal is being delayed is the mounting internal criticism of the Bank’s proposals from Senior Managers and Head of Functions in IT concerned that critical systems which underpin the Bank’s major Payment, Treasury Trading, Settlement and Digital Services are being outsourced to a third party to eventually be run offshore,” the LTU newsletter said.

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“Even the Bank admits that the migration of the accounting details of 20 million customers onto a private cloud to be run by staff based offshore could “weaken existing security controls and adversely effect the confidentiality and integrity of Bank data”. LBG customers will not be told that their personal banking data is being migrated onto a private cloud and managed offshore.”

Lloyds has yet to confirm the deal with IBM, but LTU expects the deal to be announced in the next few days.

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