What's In at Chase
Outsourcing is out at Chase Manhattan Corp. After months of negotiations with IBM about running computer operations for consumer banking, an internal Chase group has won the bidding to manage computer operations for consumer banking, according to a source familiar with Chase's plans.
The competition between the internal group and outside vendor revolved around cost savings, though at least one source said Chase officials passed along to the internal group some efficiency ideas gleaned from IBM.
Chase officials would not comment on the outsourcing talks. But Doug Williams, a senior vice president, confirmed that Chase earlier this year recast its in-house technology apparatus to run like a separate company that competes with outsiders for the bank's technology business.
To achieve savings, Chase is closing two of its four domestic data centers, a move that Mr. Williams says will drive down technology costs 25% to 35% by 1995. The bank spent $525 million on technology in the U.S. last year. Mr. Williams wouldn't comment on job cuts, but sources familiar with the operations expect several hundred people to be let go.
Chase claims that its in-house revamping will lead to improved service quality and computer efficiency that will rival the savings promised by IBM. Mr. Williams, who designed a similar program for Chase's European and Asian data operations, relocated from London to New York in January to run the U.S. project.
The new Chase unit charges internal customers for computer services based on usage rather than on a formula derived solely on department size. "It's similar to the way vendors set prices," Mr. Williams said.