Mobile banking and payments company Monitise is tightening its new alliance with IBM, transferring hundreds of its U.K.-based professional services staff to IBM, according to Finextra.
“Under an agreement first announced in July, Monitise’s entire U.K. development and integration business, including some contractors, is now moving to IBM,” the announcement said. “Our deeper level of collaboration with IBM supports the strategy update we announced in March with our increasing product focus and our ability to scale, both in terms of our delivery capabilities and our global footprint, as well as letting each company focus on its proven market-leading strengths.”
The deal will cut back Monitise’s headcount by about 1000, which is about 20 percent of its current workforce. Monitise’s technology will now be enabled, hosted and sold by IBM’s sales and consulting teams as a cloud offering in the business-to-business space. Although the initial focus will be on financial-services customers, the partners say that they will also try to win business from mobile network operators, retailers and others.
The mobile-money company also hopes that Big Blue’s backing will substantially improve its ability to handle large projects around the world as it attempts to meet another target: 200 million users of its technology worldwide by 2018.
Earlier this year, Monitise announced an intention to revamp its business model by abandoning large upfront licensing fees in favor of subscription based services designed to help banks cut costs while boosting Monitise’s income in the long term. The firm further cut its full year revenue growth forecast for the second time which tipped off a plummet in sales price.
The announcement of the deal with IBM turned those prices around some—stocks were up 14.2 percent on the announcement of the news.
The move has also touched off speculation among investors that IBM could be engaging in a gradual acquisition of Monitise. BTIG’s Mark Palmer speculated as much in a blog post titled “Monitise: Announcement of Enhanced Sales and Technology Relationship with IBM Raises Question: Are We Witnessing a “Creeping Takeover” of MONI?”
He further noted: “We believe the unusual employee transfer will only reinforce the notion that IBM may be seriously considering an acquisition of all of MONI over time.”
Under the current arrangement all of the Monitise’s customer contracts, client relationships, intellectual property, commitments and delivery remain unchanged.