IBM claims another massive outsourcing scalp

IBM has clinched a 10-year deal with the Royal & SunAlliance insurance group to host and upgrade its UK IT infrastructure.

The deal, which includes hosting mid-range servers and desktop computers, extends an existing five-year contract under which IBM hosted Royal & SunAlliance's mainframe hardware.

The two companies will also jointly invest in a research and development facility, the Innovation and Transformation Centre, where they will collaborate on new technologies.

Under the terms of the deal 285 Royal & SunAlliance IT employees will transfer to IBM over the next year to roll-out the project.

Although the value of the deal has not been disclosed, Royal & SunAlliance said it spends £50m a year on IT, but plans to reduce that by 10 per cent over the next decade through outsourcing.

The Royal & SunAlliance deal is the latest in a series of lucrative outsourcing deals for IBM's Global services division.

The group yesterday announced a $700m deal with the Bank of Canada and earlier this month it signed a $1.4bn deal with travel group Cendant.

Bill Hughes, IBM project executive and managing director of the Royal & SunAlliance contract, said the deal was very significant and was 'comparable' in value with the earlier announcements.