Consignia to outsource IT
Postal services group Consignia has invited suppliers to bid for one of the biggest outsourcing contracts in the UK this year.
Consignia is issuing a tender to outsource the majority of its day-to-day IT operations, as predicted by Computing (13 September). The 10-year deal covers systems used by 35,000 staff worldwide, for an organisation with an annual IT budget worth 600 million.
The company wants to focus on its own business and leave IT issues to a specialist vendor, says Gerry Smith, managing director of Consignia’s services group.
‘We would rather buy sorting machines than PCs. This will allow us to invest in our core activities rather than IT. We also believe there is a potential cost benefit, and it’s difficult to compete for staff as an internal provider so outsourcing will give us access to new skills in a fast changing market,’ he said.
The former Post Office says interested vendors must provide ‘clear evidence that they will be capable of managing an operation of this size.’ This could limitpotential suppliers to major players such as IBM, EDS, and Accenture, but Smithsays consortium bids are acceptable.
‘There aren’t many outsourcers with the muscle to support an outfit like this. We have to look carefully at their track record to make sure we don’t come a cropper,’ he said.
Consignia wants to set up a joint venture with the successful bidder, and retain a 51% majority stake in a new company set up to run its IT systems, instead of a traditional outsourcing model where the vendor takes over full responsibility.
‘A joint venture gives us a continuing level of input and control over the development of the organisation,’ said Smith.
The move will also avoid potential employee issues. For example, a full outsource would mean staff leaving the Consignia pension scheme, but transferring to a majority-owned company avoids this, accordingto Smith. Some 2500 IT staff will be affected by the contract.
Consignia hopes to sign contacts with the chosen supplier in October. Copyright 2002 VNU Business Publications Ltd. Source : Financial Times Information Limited
