Retailers turn to wholesale outsourcing

A growing band of retailers are choosing to outsource all of their IT functions rather than just outsourcing the management of individual applications, new research has revealed.

According to a survey by research company Martec International, eight large UK retailers are now outsourcing their entire IT functions, including two major contracts signed in the past year.

Supermarket group Somerfield was the latest to outsource when it signed a £33m seven-year deal with Tata Consulting Services in December. Over the life of the contract, Somerfield expects the cost of its IT department to fall by 33%.

DSG International, the owner of Currys, Dixons and PC World, signed its own outsourcing deal with Indian systems integrator HCL in January 2006. HCL will provide systems development, application delivery, infrastructure support and maintenance services to DSG.

Both retailers decided to go ahead with wholesale IT outsourcing despite J Sainsbury's decision to pull out of its 10-year £1.7bn contract with Accenture in late 2005.

Martec surveyed 100 large UK retailers. While only eight had so far opted for wholesale IT outsourcing, many more retailers were outsourcing individual applications than in previous surveys.

Related article: Somerfield says Tata to UK IT

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