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Author: Katharina Grimme
German insurer Allianz has announced its intention to outsource parts of its IT subsidiary Allianz Dresdner Informationssysteme (Agis) to an external service provider with the aim of achieving significant cost reductions. The tasks to be outsourced are desktop management, data networks and telecoms services, while IT governance, data centres, consulting, print operations and project services are to remain in-house (with Agis). As part of the deal, 600 of the total 1,986 Agis staff are to be transferred to the external service provider. The tendering process is to start within two months.
Comment: As we expected, the German insurance sector appears to be waking up to the idea of outsourcing. Gerling was first, in early 2005, to outsource its IT operations to SBS, including 280 staff transfers (see EuroView Daily, 4 April 2005). Now it is Allianz that is getting rid of around one-third of its IT subsidiary.
As a result of competitive pressures and changing regulations, insurers are finding themselves under increasing pressure and are looking for ways to cut costs. IT outsourcing is one way, while Allianz is also thinking about some 5,000 job cuts in its German insurance operations and a further 2,480 at Dresdner Bank (which is part of the Allianz Group).
According to press reports, Agis is talking to a number of IT service providers, including IBM, T-Systems, EDS and SBS. We question if such a deal, while certainly promising significant revenues over a longer time period, can be run profitably by any of the service providers: large-scale staff transfers imply significant costs, while most of the listed providers have been or are still struggling to reduce existing overcapacities. As yet we are not sure if we would "wish" this deal on anybody.
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