This is the largest IT outsourcing agreement in New Zealand so far this year and brings together two outsourced IT operations.
Insurance Australia Group (IAG) New Zealand's State and Circle brand business was merged with NZI in January, after IAG bought NZI and Australia's CGU from British firm Aviva last October.
Prior to that IAG had signed up Gen-I on a $NZ40 million five-year deal last August. Meanwhile over at NZI, Datacom was entrenched as the incumbent outsourcer.
CIO Catherine Rusby said it was a difficult decision and she was surprised at the closeness of the bids. Only Gen-I and Datacom were invited to tender. She said that NZI had a good relationship with Datacom, who will be retained to maintain NZI legacy services.
NZI adds just over 50 percent to the size of the existing Gen-I outsourcing requirement and Rusby anticipates annual IT cost savings following some one-off transitional expense.
She said she is happy with outsourcing for several reasons--IAG has a limited number of internal IT staff and IT is not a core competency. “We are an insurance company not an IT company,” said Rusby.
Gen-I CEO Garth Biggs said there would be economies of scale and the deal would “future proof” IAG's environment.
The contract details are the same as the previous $NZ40 million Gen-I deal because it is fundamentally a re-jigging of that arrangement over the four year time period that that arrangement had left to run.
The deal enables Gen-I to use whichever new technology it chooses to deliver the outcomes required, and covers the entire IT infrastructure except for some first level help desk work.
Gen-I leads a consortium of suppliers including IBM, Datacraft, and Rentworks.
After the four years there is a two-year option then another two-year option after that.
IAG New Zealand is a wholly-owned subsidiary of IAG in Australia, with 1800 staff, 10 call centres and 42 sales centres.
Gen-I has been operating for 25 years in New Zealand and employs 500 staff. The firm does also have an Australian subsidiary that has been running for two years. That operation made it's name early on with Citrix but has been broadening that out over the last six months into a wider focus on infrastructure and managed services.
Gen-I Australia has a full-time equivalent staff of 37, with offices in Melbourne and Sydney.