Zurich farms out IT along with 1,600 jobs

The move means a change of employer for 210 people in Switzerland Keystone

Zurich Financial Services (ZFS) is to outsource its information technology operations in a move that is expected to save the firm $300 million (SFr380 million) over seven years.

As part of the $1.3 billion deal, Zurich’s 1,600 IT jobs will be transferred to the California-based contracting firm, Computer Sciences Corporation (CSC).

Switzerland’s biggest insurer said on Monday that no layoffs were expected. Spokesman Daniel Hofmann added that the agreement would in no way weaken Zurich’s control over its information technology systems.

The company employs 210 IT workers in Switzerland. They are expected to be transferred to CSC towards the end of the year, along with other Zurich employees in Britain and the United States.

Employees in Germany will move to the contracting firm in 2005, after negotiations with workers’ groups and the authorities.

Zurich said the agreement is part of the firm’s global IT strategy, launched in May 2003, which aims to farm out IT services in an effort to cut costs.

Consolidated

Zurich has already consolidated its data processing into two centres – one in the US and one in Europe – and farmed out other functions such as data and voice networking.

Reacting to the CSC deal, Marco Curti of Zurich Cantonal Bank told Swiss television that, although outsourcing was attractive in theory, it inevitably weakened a company’s control over the operations that were farmed out.

Outsourcing, divestments and redundancies have reduced Zurich’s workforce by over 12,000 since May 2003. Today, the insurer employs about 60,000 people in 50 countries.

Last year, Zurich posted net profits of SFr2.1 billion, after two years in the red. First-quarter profits were SFr900 million.

The California-based CSC employs 90,000 people in 28 countries, with a staff of 550 in Zurich.

swissinfo with agencies

Key facts

Switzerland’s largest insurer, the Zurich Financial Services group has more than 60,000 employees and operates in 50 countries.
ZFS posted a first-quarter net profit of 900 million and a 2003 net profit of SFr2.1 billion, after two years in the red.

In brief

Zurich Financial Services is to outsource its information technology operations to a California-based company, along with 1,600 jobs.

Outsourced jobs will be offered to the former Zurich employees, according to the $1.3 billion, (SFr1.6 billion) seven-year deal with Computer Sciences Corporation.