AstraZeneca builds up in-house IT operations with 300 in India

Earlier this year, AstraZeneca ($AZN) piled another 550 in job cuts onto the 5,000 or so it had already laid out as a way to seriously shave its annual operating budget. But part of its cost-cutting announcement actually had a hiring aspect to it. It is building a global network of IT centers that will replace the technology outsourcing it has been doing for more than a dozen years.

The company has now opened the first of those, a $9 million IT facility in Chennai, India. AstraZeneca will open a second site in San Francisco in 2015 and then a third in Eastern Europe within the next two years. Even with new infrastructure and more employees, AstraZeneca figures it can cut its IT costs.

"There is a shift in the strategy with most of the outsourcing works becoming in-house operations," AstraZeneca Chief Information Officer David Smoley told the Business Standard. "At present 70% of the IT spend is with third parties and this would become 30% in the next three years."

AstraZeneca Chief Information Officer David Smoley

Smoley said he expects to lower AstraZeneca's IT spending from last year's outlay of $1.3 billion. Like many big companies, AstraZeneca got enamored with the idea of letting someone else worry about much of the IT concerns, striking a $1.7 billion outsourcing deal with IBM ($IBM) in 2001. But it later decided that arrangement didn't provide it with enough control, and in 2011 it began making the transition back to in-house operation of its IT infrastructure.

AstraZeneca says it has about 75 people at the Chennai site now but not for long. It is ramping up its hiring and expects that number to quadruple to 300 by the end of the year.

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