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Insourcing? JPMorgan Reverses Outsourcing Deal With IBM

The financial-services powerhouse is taking back about 4,000 employees and contractors from IBM.

InformationWeek Staff

September 15, 2004

1 Min Read

NEW YORK (AP) -- JPMorgan Chase & Co. plans to undo a technology outsourcing deal with International Business Machines Corp., taking back about 4,000 employees and contractors from the computer giant.

The bank's technology operations, including data centers, help desks, and telephone networks were fully outsourced to IBM in April 2003.

The seven-year deal was valued at $5 billion when it was signed in December 2002, making it one of the largest outsourcing contracts ever.

In a press release Wednesday, JPMorgan Chase said it will begin to transfer the workers back to the company in January.

IBM will continue to provide information technology services and products to many JPMorgan Chase businesses.

The reintegration follows the merger earlier this year between JPMorgan Chase and Bank One Corp. After a review, the merged firm concluded it had the resources to build its own technology services organization.

In a filing with the Securities and Exchange Commission, IBM said the reversal of the deal would have a "positive impact" on its 2005 earnings, but it was not changing its earnings estimate.

IBM shares were at $86.11, down 61 cents, or 0.7 percent, in Wednesday morning trading on the New York Stock Exchange. JPMorgan Chase shares were at $39.35, down 14 cents, or 0.4 percent, on the NYSE.

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