It is believed the Australian insurance giant is negotiating with IBM about retaining it to provide a range of IT services including hardware, software and consulting, which will build on its facilities management contract signed earlier this year.

The discussions follow the decision by IAG to bring its IT services back in house after outsourcing to IBM in a seven-year contract.

The proposed new project will involve IAG going through a desktop refresh upgrading its systems to Office XP, as well as consolidating its three mainframes to one housed leased in a new data center, as well as storage capabilities, and the outsourcing of data recovery.

The company is also considering outsourcing certain application development work to IBM and Indian offshore developer Phoenix Global Solutions. The shift in strategy by IAG has been prompted by its January 2003 acquisition of CGU in Australia and NZI in New Zealand.

This article was based on material originally published by ComputerWire.