Salvaging an IT outsourcing deal gone bad

Client Results Story


BankCo, a large bank, had complex and inefficient IT. Its IT costs were significantly above the industry standard, thanks to legacy systems, regulatory issues and a lack of scale. Management wanted to reduce IT costs by 30%. BankCo hired an external service provider (ESP) to initiate and drive an IT outsourcing initiative, but BankCo did not create a thorough deal rationale and skipped financial analysis and a Request-for-Proposal (RfP) process. This created business and IT issues.

BankCo found itself unable to execute the deal alone and asked Bain for support.


Next Approach


Bain team devised the following approach to turn around and successfully execute the deal:


Next Recommendations


The Bain team issued the following recommendations:

  • Enforce board involvement 
  • Initiate/manage involvement of bank-wide stakeholders 
  • Help to align outsourcing initiative with business and corporate strategy 
  • Retake process control from ESP and actively drive negotiations, contract design and communications 
  • Completely rebase financial and strategic deal analysis 
  • Assess ESP's cost base and enhancement initiatives to estimate ESP margin and potential of "managed base case" 
  • Drive comprehensive risk analysis effort as basis for regulatory approval process

Bain managed to finalize the multi-billion Euro IT outsourcing contract.

Next Results


Bain helped to create tangible value through outsourcing. An alternative "in-house" scenario played a key role as appropriate decision making baseline and comparator for executive management.

Related consulting services
  • IT
  • Outsourcing & Offshoring
Related industries