Just few weeks after TCS won a contract from the UKs Child Maintenance and Enforcement Commission CMEC, another stateowned organisation Transport for London TFL is seeking vendors for an outsourcing contract worth around USD 100 million, as the countrys transport organisation seeks to consolidate its information technology helpdesk and serve around 30,000 of its staffs better. The contract is the second in a series of deals worth around USD23 billion being pursued by offshore service providers, including TCS, Infosys and Wipro from the UKs state owned departments. The UK aims to save almost USD 10.6 billion annually by lowering costs of back office and IT operations across its stateowned departments, and outsourcing could help the country achieve these savings, according to experts.
The contract also involves managing IT systems for around 18,000 users at TFL, which hopes to save almost USD 3.5 billion by making its business processes more efficient.
At a time when protectionist lobbies in the US are asking the Obama administration to curb offshore outsourcing, the UK is seeking to bring down operational costs of its public sector systems by outsourcing noncore IT and back office projects.
A review of the UKs public sector IT spending by the countrys treasury department earlier this month identified the potential of around USD10.6 billion in annual savings. Government IT spending in the UK is estimated to be around USD36 billion every year, Bob McDowall, says research director at TowerGroup Europe.
Back office operations and IT, led by Martin Read, recommends better management information, benchmarking and review of costs, and better governance of ITenabled change programmes to achieve USD5.9 billion of savings a year on back office operations, and USD4.7 billion of savings a year on IT spending, HM Treasury said in its study titled Operational Efficiency Program.
The UKs stateowned departments are seeking help from the Indian offshoring industry for bringing troubled government technology systems back on track and lower the cost of managing government IT systems anywhere between 25 to 40 percent. The UKs national healthcare modernisation programme pegged at almost USD9.6 billion is among some of the initiatives that failed to deliver.
Apart from the troubled National Health Service NHS modernisation programme, which needs restructuring, HM Revenue and Customs HMRC will also seek to outsource more work, as the department plans to make it mandatory for firms employing more than 50 employees to file tax related and other information online by 2011. The UK government IT projects almost always suffer from scope creep, financial and time overrun of a significant dimension, McDowall had said.