Consignia plans to outsource its IT
Consignia plans to outsource its IT.
From COMPUTING, September 13th, 2001
By Andy McCue, [email protected]. Consignia is planning to outsource its IT division as part of a GBP
1 billion cost-cutting project. A review body is looking at the proposal to contract out a division
with a GBP 328 million annual budget. The former Post Office is committed to major cuts to meet the
challenge of expected competition for postal delivery services and
the pressure to increase profits. Its plan is to turn last year’s
GBP 264 million profit into GBP 300 million by 2004. Restructuring of Consignia’s business services division has been
under review since last year. The focus has been the business systems unit, which handles internal
IT and systems support across the Consignia group. Business systems account for GBP 328 million of the GBP 608 million
annual IT budget, employing 2,100 permanent staff. A spokeswoman confirmed that outsourcing internal IT was the main
option being considered. ‘We want to reduce costs and get the best for the IT support we
have. There is scope for us to achieve these aims by changing our
business model,’ she said. The big outsourcing companies will welcome the news, although the
health of Consignia’s core business if postal service competition is
introduced will not be certain, says Phil Morris, director of
outsourcing consultancy Morgan Chambers. ‘All of the tier-one outsourcers are going to be very interested in
the news. But everybody that goes up for the contract is going to be
looking at the uncertain future of the Consignia business,’ he said. ‘Consignia needs to examine how it would handle the introduction of
an external company into the business. It hasn’t done too good a job
in the past.’ Postcomm, the postal industry regulator, will reveal this week if
the Royal Mail letter delivery service is to be opened up to
competition. SUMMARY
– Consignia is looking at outsourcing its business systems IT
division – Analysts say the contract would be fraught with risks
www.computing.co.uk/News/1124272
www.consignia.com.
Copyright 2001 VNU Business Publications Ltd. Source : World
Reporter (Trademark)COMPUTING, 13th September 2001
