Aetna Rejects Outsourcing, Brings IBM In-House

While more and more businesses are turning over IT work to contractors, at least one high-profile CIO says he'd prefer to keep the bulk of his technology development in-house. "We have no intention of abdicating critical functions," says Wei-Tih Cheng, CIO and senior VP at Aetna Inc.

The insurance company said Thursday that it has tapped IBM to help streamline its IT operations under a five-year consulting deal. Rather than turn over Aetna's technology operations to IBM's vast outsourcing unit, Cheng is bringing IBM consultants to Aetna. "We want to leverage IBM's skills and knowledge to help our own people," he says.

Sources familiar with the agreement say it's worth a total of about $200 million.

Among other things, IBM will help Aetna build a unified claims-processing system that will reduce the time and effort needed to pay an insurance claim. IBM also will help Aetna build more self-service systems for its customers. "We want to take a leadership position in creating consumer-directed health plans; IT is what's going to allow us to create and administer those plans," Cheng says.

IBM will dispatch about 300 staffers from its business-consulting unit to work alongside Aetna's IT staff.