Melbourne: Executives of the National Australia Bank have decided to cancel the second phase of a massive outsourcing project contracted to troubled IT services firm Satyam Computer Services.
Australian IT quoted NAB technology services general manager Craig Bright as saying that the bank would be exposed to too much risk if it continued with the second wave of its IT outsourcing (ITO) strategy, which was given the green light last November.
NAB announced the decision in separate briefings to its staff and Satyam employees at Melbourne’s Telstra Dome on Thursday sources close to the company said.
The termination of ITO Wave 2 is likely to see working visas revoked for the 100 Satyam staff.
The bank has already retrenched about 50 employees, primarily contractors, as part of the early stages of ITO Wave 2, and had previously scheduled another round of redundancies in March.
The bank, however, said it would not sever the ITO Wave 1 outsourcing arrangement with Satyam that is offering support and maintenance of key technology functions.
However, it’s understood that NAB executives are considering ways to stop dealing with Satyam altogether, and either bring the technology functions back in-house or outsource them to another firm.
While it would take between three to five months to bring the components back onshore, NAB will need to find the internal resources to support the work as it has already retrenched hundreds of permanent and contractor staff that were responsible for the functions.
The Australian recently reported that NAB encountered a number of problems transitioning technology functions to Satyam in the early stages of the outsourcing program’s life.
At the meeting today the bank did not outline back-up proposals following the decision to drop Satyam.
It maybe recalled that Satyam’s chairman and founder B. Ramalinga Raju and other senior executives were arrested after he admitted inflating the company’s books by more a billion US dollars. Two partners from the company''s auditing firm, PricewaterhouseCoopers, have also been arrested.