On July 3, Infosys announced it has been awarded a multi-year application development and management (ADM) services contract by Allied Irish Banks (AIB). As a strategic partner to AIB, Infosys will:

• Provide application development and management, and transformation and innovation services
• Set up a 200-seat facility in Dublin to house staff who will be transferring from AIB plus other local staff serving other contracts that Infosys has signed in the region.

State-owned AIB has been executing a restructuring program, which includes initiatives to improve organizational efficiency. Cost discipline remains an ongoing component of its strategy and it is pursuing a medium term target of a cost-to-income ratio of less than 50% (progress so far has been good: from a 76% ratio in 2013 to 55% in 2014).

Back in January, AIB stated that, as part of its restructuring plan to reduce costs and increase efficiencies, it was planning to outsource IT activities, with about 450 roles potentially affected as suppliers take over services. 

• Announced contracts to date have been for IT infrastructure services, with awards to Wipro ($150m mainframe services deal announced January, ~130 personnel transfer, with Wipro also setting up a center in Dublin), Eircom (~30 personnel transfer) and Integreon (security services, handful transfer). And in 2014, HCL took over some EUC services at the bank (~73 personnel transfer)
• Around 300 staff will be affected by the bank's outsourcing of applications services; most of these employees will transfer to Infosys and also to Wipro (the other ADM service provider selected by AIB).

Notable features of these awards include:

• The bank has selected Indian oriented services providers (IOSPs) for all its major IT outsources, and it had no previous significant experience of working with any of them. In contrast, the Bank of Ireland (BoI) last year chose a more familiar partner, Accenture, when it outsourced its group technology and change division (200 people)
• Infosys and Wipro are both setting up sizeable centers in Ireland to service AIB. This will have been one of the factors that will have helped in AIB's selection. And of course, Infosys and Wipro expect to use their centers to service other local clients
• In this contract, Infosys is to provide support to AIB for its digital transformation journey - as well as the operational efficiency focus, AIB (like other retail banks) is also increasingly investing in its omni-channel customer strategy. The bank has also had Accenture providing consulting services around digital transformation.

With reference to its $10m innovation fund being set side, Ireland has a significant Fintech market, which will be attractive to Infosys.

AIB also signed some BPO contracts in 2014: payments clearing to BancTec and learning services to Accenture. Are more BPO awards on the cards?

BoI's IT infrastructure management contract with IBM is up for renewal this year: Wipro and HCL will clearly be interested.

And for Infosys, it gains another banking organization as a major client for ADM services in Europe. Just a week later, Infosys also announced a major application services contract with longstanding client Deutsche Bank, who has selected Infosys as one of its strategic technology services partners. See here

(Details of all these outsourcing contracts are available to subscribers of NelsonHall's contract database).