Investment bank cancels IT outsourcing deal

Investment
bank JP Morgan Chase has cancelled a multi-billion IT outsourcing contract with
IBM and is bringing 4,000 employees back in house.

The
company, which signed the $5bn (£2.8bn), seven-year contract with IBM in 2002,
said its recent merger with Bank One had created a firm with “significantly
greater capacity to manage its own technology and infrastructure”.

From
January 2005, approximately 4,000 IBM employees and contractors currently
supporting the JP Morgan Chase account will be transferred back to the bank.

The
announcement follows speculation in March this year that the bank was planning
on terminating its outsourcing agreement with IBM after it merged with Bank
One.

At
the time it was rumoured that JP Morgan was reviewing the contract due to
opposition from Bank One chief executive Jamie Dimon. During his four-year tenure at Bank One, Dimon cancelled similar contracts
worth $2bn (£1.1bn) with IBM and AT&T.

JP
Morgan Chase insists that IBM is still a key technology partner, providing
services to a number of its major businesses.

By Daniel Thomas

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