Insurance firm cancels £160m EDS contract

Insurance firm cancels £160m EDS contract

Thirteen-year deal struck in 2004 will terminate in March next year

Insurance company Liverpool Victoria (LV) is terminating a £160m, 13-year outsourcing deal with EDS after only four years.

The deal, covering an extensive transformation programme, was signed in 2004. But from next March it will be replaced by up to five smaller partnerships working with an in-house team.

The company says the split with EDS is a mutual agreement and will make no statement as to the costs involved.

Bringing the IT department back inside the organisation will help LV meet its growth targets, said a spokeswoman.

“LV is a fast-changing business in a highly competitive market and we need a more advanced technology capability to be able to deliver both better solutions for employees and better processes, systems and efficiency for the business as a whole,” she said.

“We are therefore reviewing our partner services and establishing a core LV IT team to lead the process of change.”

EDS’s LV deal is the latest to suffer from the trend away from single-supplier megadeals, according to National Outsourcing Association chairman Martyn Hart.

“One-stop-shop outsourcing relationships made sense when it was just a question of infrastructure,” he said.

“But it is hard for that kind of deal to deliver what you want beyond that, and there is a trend to move towards smaller best-of-breed suppliers under a multi-sourcing arrangement.”

A spokeswoman for EDS said: “We are working closely with LV to ensure a smooth transition.”

One new supplier already in place is edgeIPK. LV is using the firm’s edgeConnect software to cut the development time and cost of building front-end applications.