Local firm beats rival to $50m IT contract

By RICHARD WOOD

Auckland 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 more than $500 million, much of it attributable to Telecom.

Last week alone, Telecom signed previously flagged multi-year telecoms outsourcing deals with partners Alcatel and Lucent worth $320 million.

Alcatel takes management and operation responsibility for Telecom's fixed-line network, and 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 it 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 added over 50 per cent more infrastructure to IAG's merged IT and, after some up-front costs, there would be annual IT savings, which were not disclosed.

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

Gen-i had the flexibility to use new technology as it saw fit. The outsourcing contract reflected a trend towards corporates farming out their large-scale IT and telecommunications needs.

Other companies to sign 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.

IT staff would not change as 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 in maintaining NZI's legacy systems and Rusby said choosing between them was difficult.

"They were very sound bids and a lot closer [in dollar terms] than I would have guessed."