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NAO reveals profit margins of outsourcers

Government IT outsourcing suppliers have made profit margins of up to 40% a year, says a report by public spending watchdog the National Audit Office.

Government IT outsourcing suppliers have made profit margins of up to 40% a year, says a report by public spending watchdog the National Audit Office.

In the small print of a report on Aspire, a contract between Capgemini and HM Revenue and Customs worth between £3bn and £6bn, the Audit Office noted Accenture made an annual profit margin of 25.9% to 39.7% on its amended deal to provide national insurance recording systems.

The Aspire contract itself yields profit margins of between 5.6% and 27.2%, the Audit Office said.

EDS, whose 10-year, £2bn contract with the Inland Revenue ended in July 2004, had a profit margin ranging from 13.5% to 26.5%.

In comparison, outsourcing suppliers to the National Programme for IT in the NHS, for which contracts worth more than £6.2bn have been awarded, have target profit margins of between 7% and 19%.

 

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