The landmark outsourcing deal that Zurich Financial Services signed in July begs this question: Is outsourcing back in vogue, or is Zurich's situation unique?Insurance executives surely will scrutinize the results and ramifications of Zurich's seven-year, $1.3 billion application maintenance and development deal with CSC. For starters, the arrangement is expected to save Zurich $300 million over the seven-year period. But more importantly, executives will be keenly interested in how Zurich is able to execute its business strategy, now that responsibility for new application development is out of the hands of Zurich's IT staff.
On the surface, Zurich's decision to offload application development and maintenance for all business processes, including new business, underwriting, claims and customer service, appears to be a huge gamble, considering that the IT work will be conducted around the world, from India to South Africa to Eastern Europe. Zurich's goal is to standardize IT operations, manage IT resources centrally and move away from its geographical business and IT orientation.
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