Royal Mail to outsource GBP1.5bn IT operations

Royal Mail is preparing to outsource its nationwide IT operations in a deal worth up to pounds 1.5bn. The company is expected this week to sign a 10-year agreement with a consortium including CSC, the American computer services group, and BT, the telecoms giant. The deal involves the transfer of 2,000 jobs out of the Royal Mail group. The move is part of Royal Mail’s drive to focus on its core operations and to slash operating costs. The group has already outsourced building operations and maintenance as well as employee health services. Royal Mail’s massive IT operations are among the biggest in the UK. They span the maintenance of Royal Mail’s mainframe and desktop computers as well as automation of sorting offices and mail-tracking systems. The operation is currently spread across a number of locations including London, Farnborough in Hampshire and Chesterfield in Derbyshire. The latest deal is likely to cut Royal Mail’s annual costs by many millions of pounds. The group is already set to reveal sharply reduced losses for last year when it announces its financial results at the end of May. Under the leadership of Allan Leighton, the chairman, Royal Mail has embarked on a three-year recovery programme which will involve the loss of around 30,000 jobs. The company will announce in May that it has completed a sweeping restructuring of its Parcelforce arm which will generate further savings in this financial year. Royal Mail has also announced a programme of urban post office closures.