Infosys will take over Danske Bank's IT operation in India as part of an IT outsourcing contract worth $454m over five years, to accelerate the bank’s digital transformation.

The Indian supplier is acquiring the Danish bank's IT centre in Bangalore, which houses 1400 IT professionals, and will introduce generative artificial intelligence into the services.

Danske Bank chief operating officer Frans Woelders said the agreement is part of a business strategy, known as "Forward ’28", which includes increasing annual investment in digital platforms.

“Our Forward ’28 strategy sets clear ambitions for Danske Bank to be a leading bank in a digital age," said Woelders.

"This is backed by significant investments in digitalisation and technology, including plans to further develop our customer-facing digital solutions, and modernising our technology infrastructure to enable even better customer experiences and drive operational efficiency.”

The Nordic countries form a growth region for Indian heritage suppliers like Infosys. Earlier this month Sweden’s Ikano Bank outsourced its core banking system to Tata Consultancy Services (TCS) as it attempts to move to a single core banking system for all the countries in which it operates.

The Swedish bank has about 1,200 staff in eight countries, including the UK, Sweden’s neighbouring Nordic countries, Germany and Austria.

A spokesperson for Infosys said: “Nordics is a strategic market for Infosys and this collaboration further enhances our commitment to the region. With this relationship with Danske Bank, Infosys has further enhanced its localisation strategy in the Nordics.”

Peter Schumacher, CEO of management consultancy The Value Leadership Group, described Danske Bank’s decision as a “déjà vu” moment in IT: “It is a strategic reversal bringing them back to where they were 20 years ago.”

He said many companies underestimate the upfront and ongoing investments required to create and capture added value from their centres in India: “It is a complex multi-directional challenge and many parent companies will often prefer to maintain a status quo of mediocrity for many years before making the needed changes to improve performance.

“More often than not the problem resides and compounds at the parent organisation where the focus is on cost reduction, incremental improvements, stability and control rather than on creativity and innovation, and most importantly building system advantages. Corporate executives typically will define the captive’s role according to how they see its importance and more often than not this view is shaped by yesterday’s assumptions,” added Schumacher.

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