Strategic CIO // IT Strategy
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7/25/2011
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IBM In $665 Million Outsource Deal With Manulife

Multinational insurer will hand off server, security, disaster recovery, and other critical IT operations to Big Blue.

Manufacturers Life has inked a seven-year deal with IBM under which the insurance company will outsource a number of key tech operations to Big Blue. The deal is worth $665 million over the life of the pact, IBM said.

Under the agreement, announced Friday, IBM will monitor and manage key infrastructure components for Manulife, including midrange and mainframe servers, and related storage devices. IBM will also help maintain Manulife's business continuity, disaster recovery, and security systems.

Insurers like Toronto-based Manulife, which operates in the U.S. under the John Hancock brand and in 21 other countries, are facing stricter government regulations around liquidity, privacy, and security. Company officials said the deal with IBM will help them leverage state-of-the-art technology to help meet those requirements.

"This contract will provide us with leading edge-technologies in the efficient and effective growth of our business," said Manulife CIO Joe Cooper, in a statement. "IBM's expertise in the finance and insurance sectors also assists Manulife in the execution of its information services strategy by providing industry skills required to support our businesses and customers."

Manulife, which has been working with IBM for the past decade, will also evaluate IBM's cloud-based infrastructure for hosting business applications and services. "Our ten-year relationship with Manulife provides a strong foundation for us to share global expertise in cloud computing," said Leslie Keating, VP for Global Technology Services at IBM Canada, in a statement.

"In today's interconnected world there is an increasing need for businesses to be prepared and agile to deal with new and evolving opportunities and threats. By continuing to evolve Manulife's core infrastructure to improve services and increase efficiency, we are helping to strengthen their competitiveness," said Keating.

IBM's deal with Manulife could give the North American outsourcing market a much-needed lift. The total value of large outsourcing contracts in the Americas declined by 51%, year-over-year, to $5.2 billion, in the second quarter, according to market watcher Technology Partners International.

IBM's worldwide revenue from technology outsourcing services increased 11% last quarter, to $10.2 billion. IBM shares were flat in pre-market trading Monday, at $184.42.

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