John Hancock signs Big Blue deal

John Hancock has become the latest financial services giant to outsource a good portion of its computing operations to IBM.

Boston-based John Hancock announced Wednesday that it will shift the management of mainframes, desktops and other information technology tasks currently performed by its own infrastructure support services group to Big Blue. The contract is expected to save John Hancock about $90 million over the life of the contract, the company said.

As part of the contract, IBM will allow John Hancock to obtain extra computing power during peak periods without buying additional hardware or software. John Hancock, though, emphasized that it will continue to develop and maintain its core applications.

The contract is an example of IBM's so-called computing-on-demand strategy, in which large institutions pay for computing power like they pay for electricity or water, according to a Big Blue representative. Similar strategies are under way at competitors Sun Microsystems and Hewlett-Packard.

Although some skeptics have said utility computing or computing on demand are just fancy terms for outsourcing, financial services companies are clearly interested. In February, Paris-based AXA Group signed a similar six-year, $1 billion contract with IBM, while J.P. Morgan Chase signed a seven-year $5 billion contract in December.

John Hancock will lay off 280 employees due to outsourcing, but IBM will rehire about 180 of them, John Hancock said.

Neither company would place a figure on the value of the contract or say how long it will last.