Gen-i beats rival Datacom to $50 million deal

By RICHARD WOOD

Local firm Gen-i is rapidly establishing itself as one of the biggest IT outsourcers in New Zealand after beating rival Datacom to a $50 million four year deal with the New Zealand arm of Insurance Australia Group.

That brings the tally of IT and telecoms outsourcing deals signed this year to a total of over $500 million, much of it attributable to Telecom.

This week alone, Telecom penned previously flagged multi-year telecoms outsourcing deals with partners Alcatel and Lucent worth $320 million. Alcatel takes management and operation responsibiltiy for Telecom's fixed-line network while Lucent looks after the 027 mobile network.

The biggest IT outsourcing contract of the year so far, the Gen-i deal displaces a $40 million five-year contract Gen-i won with IAG last August.

IAG's Australian parent bought NZI in October, quickly merging the operations, which encompass the State and Circle brands. IAG's chief information officer, Catherine Rusby, said the NZI operations add over 50 per cent more infrastructure to IAG's merged IT and after some up-front costs there will be annual IT savings, which weren't disclosed.

Gen-i chief executive Garth Biggs said that in servicing IAG, the company will lead a consortium of suppliers that includes IBM, Datacraft and Rentworks.

Gen-i has the flexibility to use new technology as it sees fit. The outsourcing contract reflects a trend towards corporates farming out their large-scale IT and telecommunications needs. Other companies who have signed multimillion dollar outsourcing deals this year include Air New Zealand, Tower and Telecom.

Rusby said outsourcing meant IAG could now focus on its core business - insurance.

"We are an insurance company not an IT company", she said.

There will be no IT staff changes because NZI's IT was fully outsourced and IAG's mostly so.

The tender was limited to Gen-i and Datacom a larger company with an extensive outsourcing business. Datacom remains involved at IAG maintaining NZI's legacy systems and Rusby said choosing between them was a difficult decision. "They were very sound bids and a lot closer [in dollar terms] than I would have guessed".

Other major outsourcers in New Zealand include multinationals EDS, IBM, HP and Unisys.