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Lloyds to ‘offshore’ 2,000 jobs in IBM data centre outsourcing deal

Mon 13 Mar 2017

Lloyds Banking Group

Lloyds Banking Group plans to move almost 2,000 members of staff to U.S. tech giant IBM as part of a £1.3 billion IT outsourcing deal.

The seven-year deal hopes to save the bank close to £760 million in costs, streamline the business and make its IT services more agile.

Lloyds Trade Union (LTU), which represents around 35,000 members of staff, now ‘derecognised’ by the bank, claimed in a newsletter that once the deal is signed the jobs would be ‘offshored’ over a four-year period. It added that most of the 1,961 positions would be cut.

‘1,961 staff will be transferred to IBM including permanent staff, contractors, 3rd parties and offshore suppliers. However after 4 years, only 193 of the staff transferred to IBM will still be working on the LBG contract,’ wrote LTU.

Under the deal, first announced in January, IBM will pay Lloyds for its data centre assets and in return will charge the bank for ongoing management. The majority of staff are expected to be transferred to IBM from the bank’s data centres in West Yorkshire and Edinburgh.

The union further claimed that the deal was being postponed as many senior Lloyds IT managers were concerned that ‘critical systems which underpin the Bank’s major Payment, Treasury Trading, Settlement and Digital Services are being outsourced to a third party to eventually be run offshore…’

In a recent presentation to analysts, Lloyds Banking Group’s Chief Risk Officer, said that cyberattacks were the biggest risk to financial institutions.  ‘The question is whether security is better managed by systems that are run by LBG or by a third party whose staff are based offshore?’ he said.

The LTU newsletter added that the bank admits that migrating the accounting data of 20 million customers onto a private cloud could ‘weaken existing security controls and adversely affect the confidentiality and integrity of Bank data.’

The prospective deal comes after LBG suffered a denial of service attack in January, with hackers blocking user access to online services.

LBG has made significant cuts to its staffing over the last two years, with layoffs amounting to 12,000 between 2015 and 2017. It closed over 200 branches and cut 3,000 jobs last summer, after the Brexit vote, and binned a further 1,300 the following October – 640 of which were IT personnel.

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