Outage-hit Lloyds Bank in talks to outsource data centres to IBM

Nope, don't see any problems shaping up there. None whatsoever.

Exclusive In the week that Lloyds Banking Group suffered multiple outages, it has emerged the UK financial giant is negotiating to outsource management of its bit barns to IBM Global Business Services.

Online services were interrupted on Wednesday and Thursday by unspecified technical glitches that prevented people from logging into their accounts, a problem that again flared up over lunchtime today.

Multiple sources told us about the talks with Big Blue – which started some months ago – though there is no certainty an agreement will be reached.

“IBM is having conversations with Lloyds about a massive buyback of their estate,” said a person familiar with the matter, adding: “Lloyds will reverse management and the estate and maybe get some cash in the process.”

Under the deal, IBM would pay for the data centre assets, transfer them to its balance sheet, and then charge Lloyds for the ongoing management.

Jacqueline Guichelaar, CIO of infrastructure and technology services at Lloyds, is leading the discussions, we were told. She joined the bank in February last year, initially as head of infrastructure and service delivery.

Before that she was head of transformation at Deutsche Bank during which time she signed a 10-year multi-billion pound contract with HP to run its tech infrastructure. Other areas including IT architecture, app development and infosec remained in-house.

Further back in the annals of time, Guichelaar was the director of IT at CSC and a director at IBM Australia for six years until 1999, where she was a project exec, service delivery head and op support manager.

A contact close to Lloyds told us the IT department were aware of the potential IBM deal that may see some existing staffed TUPE’d across.

Lloyds, whose main data centres are in Copley, Pudsey, Peterborough and Corby, is going through a drastic makeover: it closed 200 branches over a 36-month period and made 640 techies and back office function people redundant as part of a wider cull of 9,000 jobs.

“This [data centre deal] is all about cash, getting a short term shot in the arm, but Lloyds isn’t thinking about future support,” a contact said. “It looks good on the balance sheet for the City.

Another source close to Lloyds that was aware of talks with IBM concurred: “It is all about cost cutting and the bottom line, not service.”

The potential pitfalls of outsourcing have long been discussed in the pages of The Register, brought into clearer focus by outsourcing firms which are offshoring work to lower-cost labour locations.

IBM, for example, intends to base 80 per cent of its service staff in cheaper labour countries by the end of 2018. Meanwhile, HPE and Fujitsu are running similar programmes, albeit less ambitious in terms of numbers.

One slip up came to the fore recently when a source at IBM claimed the offshore support team in Poland had sent a Microsoft System Center Configuration Manager (SCCM) operating system deployment task to unauthorised targets, “taking out 45 plus servers” at a well-known bank in Ireland.

The admins were not sufficiently experienced to run quality assurance checks on the right targets, nor “savvy enough to develop deployment routes that ensure such deployments only trigger against specific clients using the functions of SCCM to provide that protection,” our source said.

“The general quality levels following IBM's international push towards cheaper resources for repetitive, simple day-to-day tasks has come at a shocking price for our customers: quality and trust,” he claimed.

IBM and Lloyds are trying to ascertain if they want to make a comment, and Guichelaar had not responded to an email request for comment at the time of writing. ®

Updated to add

A spokeswoman at Lloyds Banking Group refused to comment.

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