Post Office considers outsourcing operations
Post Office considers outsourcing operations
Financial Times; May 31, 2001
By KEVIN BROWN
Consignia, formerly the Post Office, is considering outsourcing large parts of its operations, including letter sorting and delivery, to enable it to compete with potential private sector rivals.
The proposals are understood to have emerged during an efficiency review by KPMG, the professional services firm, as part of Consignia’s efforts to prepare its Royal Mail letters subsidiary for competition.
Mail deliveries were thrown into chaos last week by a wave of unofficial strikes over new working practices. Many observers believe that up to 30 per cent of Royal Mail business is vulnerable to competition.
Consignia said it was considering “options” for change, but refused to confirm suggestions in today’s Computer Weekly that it has held detailed talks with Siemens, the German information technology and business services company.
“Consignia operates in a highly commercial world, and is facing increasing competition in the mail business. We are constantly looking at ways to improve our performance,” the company said.
“As we have not made a final decision, we are not in a position to say which option or range of options we will go for, or what impact they may or may not have on staffing.”
Consignia is thought unlikely to decide whether to go ahead with significant outsourcing until after the general election because of the political sensitivity of the issue.
Stephen Byers, the trade and industry secretary, last week ruled out privatisation of Consignia, which is a government-owned plc, but warned it to “raise its game” and endorsed the prospect of joint ventures.
Outsourcing would be strongly opposed by the Communication Workers Union, which last week elected a left-winger as general secretary on a platform of opposition to any changes in working conditions caused by competition.
Consignia managers have warned postal workers that they face large scale redundancies unless Royal Mail efficiency is improved before the first serious competitors appear.
Legislation that took effect in March allows a new Postal Services Commission to control Royal Mail prices, seek improvements in performance and licence competitors for all or part of its letters market.
The commission is talking to large European post offices and private sector express mail companies such as DHL, UPS and TNT.
No new competitors have yet entered the domestic letters market, although Consignia already faces competition for parcels and international letters. The first domestic letters licences are expected to be awarded in the autumn.
Copyright: The Financial Times Limited
