A recent Alltel Corp. outsourcing agreement with Poland's largest bank is the latest in a growing number of overseas deals by U.S. service providers.
The $43 million agreement with Grupa Pekao SA, which has $13.4 billion of assets and 564 branches, is Alltel's third international outsourcing deal.
Last year the Little Rock-based company signed a seven-year, $267 million contract to do the data processing for $14 billion Colonial Ltd. of New South Wales, Australia.
And in 1995, Alltel signed a long-term agreement with Metropolitan Bank and Trust Co. in the Philippines.
Also pushing internationally is Electronic Data Systems Corp. of Plano, Tex. Its global division has lined up more than $8 billion in business from financial institutions-70% of them foreign-over the past 18 months. The customers include Banca di Roma of Italy, Societe Generale of France, Commonwealth Bank of Australia, and Bank of Ayuda in Thailand.
The rise in international outsourcing coincides with banking deregulation and privatization in many countries. At the same time, global competitive pressures are growing.
"Entities that were government run and operated are getting into the private sector and are having to find ways to be competitive," said Chong Ng, EDS' financial industry group vice president for global strategy and marketing.
Globalization also necessitates better systems-ones that can handle the euro, for instance, said Paul Johnston, an analyst with International Data Corp. of Framingham, Mass.
IDC predicts that bank outsourcing worldwide will increase 12.4% annually, from $15.5 billion in 1997 to $27.9 billion in 2002. In the United States bank outsourcing is projected to increase 11.8% annually, from $9.5 billion to $16.7 billion.
U.S. technology company officials said nearly all of their outsourcing competition in the Far East comes from domestic peers, not from firms in Asian and former Soviet-bloc nations. In Western Europe, competitors such as Cap Gemini of France and SEMA Group of the United Kingdom, surface, especially within their home turfs.
Alltel has established a subsidiary in Poland to support its contract with Pekao and pursue other opportunities there.
"Central Europe has very promising emerging economies," said Wayne Ginn, Alltel's managing director for Europe, Africa, and the Middle East. "Their banking systems are antiquated, and they are now in a position to look forward to emerging technology."
