Royal Mail signs £1.5bn outsourcing deal

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Royal Mail signs £1.5bn outsourcing deal

Mike Simons
Royal Mail has finally signed a contract with the Computer Sciences Corporation-led Prism Alliance for a £1.5bn deal to outsource its IT operations.

Royal Mail expected to save £250m during the 10-year contract, which will see CSC, BT and Xansa run datacentres, data networks, voice services, desktop computers and more than 600 business application systems.  

Royal Mail chief executive Adam Crozier said, "This is a vital component in our renewal plans in terms of reducing costs and giving us the information technology services that we need."

Unions representing Royal Mail staff had threatened strike action over pension rights and compulsory redundancies for staff transferring to the consortium.

However, Crozier said, "We have worked very hard to make sure our people are taken care of. As well as the statutory transfer regulations [Tupe}, which protect staff interests, we have negotiated additional guarantees on job security and pension arrangements. The outsourcing also opens up fresh career opportunities for our people within companies that are global players."

More than 1,700 people, mostly IT professionals employed by Royal Mail, will transfer to CSC, Xansa and BT on existing terms and conditions under Tupe regulations.

CSC will account for approximately 1,470 employees, Xansa 220 employees and BT 45 employees.

CSC will manage the contract and will be responsible for the maintenance of Royal Mail's 42,000 desktop computers and the management and development of Royal Mail's server, mainframe and IT processes. It will also develop and maintain applications and provide a range of professional services.

BT will provide a new network and services worth £450m over 10 years, including local and wide area voice, data, mobile, internet and firewall technologies. The telco will also provide support services for call centre operations and video and audio conferencing.

Xansa will provide application management and enterprise solutions to Post Office Limited and Royal Mail Group corporate functions worth up to £180m over 10 years.


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