UK, Council, Outsourcing, Contract, Capgemini

UK Council scraps outsourcing plans - second phase of its contract too costly

UK' Swansea City Council has scrapped plans for the second phase of its outsourcing contract with Capgemini due to cost.

Swansea finally inked the £83m 10-year contract for phase one of the service@swansea project last year after a bitter 18-month battle with IT staff and trade union Unison over whether workers would be permanently transferred or seconded to Capgemini.

The original projected cost-savings for both phases of the outsourcing deal were £72m, of which £26m was for the first phase covering IT support and the replacement of 30 outdated IT systems for its finance, procurement, personnel and payroll functions. Currently Swansea has identified and signed off £7.4m of the £26m cash savings targeted in phase one.

Phase two was to consist of creating a new call centre and website front office to give local people a single point of contact with the council. The council's cabinet agreed with a recommendation this week not to proceed with phase two of the contract because of the cost - although Capgemini claimed this was actually lower than the original quotation.

Martyn Hart, chairman of the National Outsourcing Association, said: "The fact that Swansea Council and Capgemini have had their fingers so badly burned through this deal is likely to be because best practice procedures were not in place from the start.

"The Swansea project is a perfect example of the necessity for organisations to properly research and formulate outsourcing projects and conduct all the correct sourcing procedures, including consultation with the staff and unions, as early as possible."

Capgemini said it remains "firmly committed" to the council and to Swansea.