Comonwealth Bank Outsourcing

THE Commonwealth Bank will put one of the country's most sought-after software services contracts on the market over the next few months, but India's big guns of outsourcing seem likely to have an uphill battle to secure a piece of the deal.Commonwealth chief information officer Michael Harte said he had spoken to most of India's top services companies, but he still had reservations about tapping the firms for the bank's planned software services panel.

The bank's existing applications maintenance and development outsourcing contract expires in October as its $5 billion, 10-year technology services agreement with EDS ends. The EDS deal will be replaced by a panel of software services suppliers under long-established plans.

The bank is yet to call for bids for the panel. "We talk to all the usual people: Tata, HCL, Wipro, Satyam, Infosys, the works. They're all knocking on our doors," Harte says. "We continue to talk to them because we wish to understand not only their capability but also how you would go about working with them in the event we were in a position to move in that direction.

"At the moment we're still concerned about the scale of the work we can send and we're not that interested in doing it for economic reasons only." Harte says the bank's chief concern was quality of service, not the cost saving that could be reaped from using traditionally cheaper destinations such as India or The Philippines.

The bank is struggling to find a clear advantage in using Indian service providers, as opposed to US multinationals such as IBM, EDS, Computer Sciences Corporation and Accenture," he says. "We still haven't been able to make it stack up on an economic basis. "We haven't been able to make it stack up on a risk-weighted basis, and we haven't been able to make it stack up on a quality of service basis."

Harte says the bank's position could change over the next six months as the end of its current outsourcing agreement approaches. He also notes that multinationals with longer track records also have offshore facilities and outsourcing to lower-cost destinations through firms such as IBM and Accenture appears to be less controversial.

"There doesn't seem to be the same level of negative sentiment with those providers, but be that as it may, we haven't formally engaged with either IBM or Accenture, although they're just as active in their campaigning," Harte says. Other offshore options that the bank is exploring include using applications development and business process management resources in regional banks that the Commonwealth has invested in.

Such a move would take the Commonwealth down a similar path to the ANZ Bank, which uses offshore resources that it owns to augment local technology skills. "We've done a lot of work to understand having our own capabilities in the region.

"We have interests in two Chinese banks and we've just bought another Indonesian bank, so we have a more scalable business operation in Indonesia," Harte says. "As our product and services portfolio increases in the Asia region we would look to fulfil application development and application maintenance and processing support in those banking investments."

The bank has yet to take up that option, but skills and work exchange would be a two-way street, Harte says. "We're trying to create more new jobs and the exchange of people would involve some of our experts and executives going into the Asian region. "We would try to hire and train more graduates here," Harte says.