Zurich hands £1.6bn outsourcing deal to CSC

Zurich Financial Services has signed a $1.3bn (£706m) global outsourcing contract with CSC, which it hopes will deliver savings of up to $300m (£163m).

CSC will handle the provision of application development and maintenance services to Zurich's businesses in the UK, US, Switzerland and Germany.

'This agreement will introduce new efficiencies in applications service delivery and help us direct the right resources to the right business priorities when and where we need them,' said Zurich's chief information officer Michael Paravicini.

He says the seven-year deal will deliver three key advantages for the firm.

'First, it will give us greater flexibility in terms of correcting misalignment between the demand and supply of our products. Second, it will improve productivity by changing our business model to align IT around business units, rather than geographic regions.

'Finally, it will help deliver net savings of about 25 per cent, about $300m, in a very short-term period. Usually these benefits start to show at the end of the contract, but we will start to see gains starting from 2006,' he said.

The agreement will involve the transfer of about 1,600 staff in Zurich's global offices to CSC between now and later next year.

'The key thing is that this is a very flexible deal for us. It's a better way to streamline our applications and improve our platform for the future,' said Paravicini.

The deal is a key component of Zurich's global IT strategy, announced last May, which aims to consolidate and streamline technology services throughout the group and to centrally manage IT as cost-efficiently as possible.

Since then, Zurich has consolidated several global data centres into one for Europe and one for the US, as well as outsourcing other components of its technology infrastructure to Equant and IBM.