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Lloyds finally inks mega 10-year cloudy outsourcing deal with IBM

1,500 staff and contractors to be shipped over

Exclusive Lloyds Bank has today inked a mega 10-year cloudy outsourcing deal with IBM, with 1,500 staff and contractors to be shipped over to Big Blue - according to internal memo seen by The Register.

The bank has been negotiating with IBM to outsource the management of its bit barns to IBM for many months, as we exclusively revealed in January.

Those talks concluded today, with Lloyds announcing to staff it has "signed one of the largest cloud transformation deals" within the financial sector. The shift to IBM's private cloud will take three years.

"Most colleagues working in Infrastructure Technology Services supporting these systems and delivering change will transition to IBM, with a number retained in Lloyds Banking Group to manage the relationship, service and governance of IBM," said the memo.

As a result, around 500 staff will transfer to IBM on 1 September 2017. Some 1,000 contractors who currently support Lloyds Banking Group will also move to support IBM.

However, Lloyds Trade Union had previously warned that staff would be outsourced to IBM, and then over a four-year period the work would be offshored.

The teams earmarked to move to IBM are those working with Linux, Windows X86, UNIX and iSeries.

Lloyds said it will maintain "a substantial retained organisation" in its Group IT function, to provide service, manage the cloud transformation and "help deliver the benefits over the coming years as part of our transformation partnership."

Morteza Mahjour, group CIO, said the deal will allow the bank to become "highly scalable" and provide "up to date technology on demand".

He said: "As customer demands change and innovation in the industry gathers pace, having a more modern and agile technology platform will help us lay the foundations for the next phase of our strategy.”

It said controls and mitigation plans have been established to offset the risks of outsourcing everything to IBM's private cloud.

Dominic Hook, Unite national officer, said the union was "seeking urgent reassurance from IBM and Lloyds Banking Group about the long term job security of the 1,500 IT staff."

He added: “This announcement will leave staff nervous about their future and angry about the loss of their final salary pension. The key concern for staff is that they get assurances about what this change will mean following the transition period and that there will be no change to their pay and terms and conditions. ®

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