Are utility companies set to be the next big IT outsourcers?

Smart metering and pressure to cut overheads are encouraging utility firms to outsource more.

A source recently told me that there are loads of outsourcing deals in the pipeline that involve utility companies.

The Smart Metering Implementation Programme (SMIP), which will provide homes and businesses with smart meters to help them reduce energy use, is increasing outsourcing.

Scottish and Southern Energy has for example outsourced some of its planned smart metering processes and IT to Logica. There is likely to be more as utility companies shy away from making the upfront investments required to adhere to the SMIP rules.

Ovum recently said factors including the need for new infrastructure investments, ongoing industry consolidation, and increasing interest in smart energy initiative are driving utility firms to outsource.

Meanwhile Robert Morgan at sourcing broker Burnt-Oak Partners says that the regulated status of utility firms means that they are under pressure to show they are lowering their own costs. This is because they are increasing prices and the regulators want to know what they are doing to control their own costs.

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