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Abbey to terminate £270m EDS joint venture?
Deal is a millstone as bank looks for buyers, says document...

By Andy McCue

Published: Monday 17 May 2004

High street bank Abbey is reported to be considering terminating its £270m BPO joint venture with EDS, in a move that could see up to 600 jobs moved to India.

Newspapers at the weekend quoted an internal EDS document saying the joint venture is a major barrier to Abbey fulfilling its own strategic objectives, which are reported to include the sale of the bank.

The document also reveals that Abbey is looking to make cost savings by "reducing duplication of roles, transferring work to larger sites and basing some operations offshore".

Abbey already has 400 customer service positions at its operations in Bangalore and if the bank's billing and call centre functions were also offshored that would mean the loss of 470 jobs near Southampton and another 100 in Stockton-on-Tees.

Abbey and EDS have issued a joint statement on the reports and said: "Abbey is undertaking a review of all its operational sites as part of an ongoing programme to streamline the business."

Anthony Miller, analyst at Ovum Holway, said the Abbey and EDS venture has failed to fulfil its aim of becoming a third-party mortgage services provider and has no other clients other than Abbey.

"This is often the trouble with outsourcing deals - both IT outsourcing and BPO - that start life as a joint venture," he said. "Rarely do they progress to full commercialisation unless and until the services provider bites the bullet and acquires the share of the client JV partner and runs the business alone. As Abbey is now apparently finding, these JVs are also a potential liability when looking for a suitor."