Around 1,000 staff leave CSC - a key supplier to the £12.4bn NHS scheme

Services supplier CSC in the UK has given a series of creditable responses to Computer Weekly on our questions about its finances and high-level departures.

The company says, for example, that more than 1,000 staff have left the business, either through early retirement or voluntary redundancy.

Within the context of an organisation of over 9,000 [in the UK], “this has necessarily included some senior executives leaving the business”, it says.

CSC is also taking on some people. By 8 January the company is due to have taken over nearly £2bn worth of NHS work from its US-based rival Accenture. As part of this transfer of work CSC is acquiring more than 300 UK Accenture staff who have been working on the NHS contracts.

Our questions to CSC had been triggered by information sent to this blog.

The continued robust health of CSC is particularly important to the NHS. It is the main supplier to the NHS’s National Programme for IT [NPfIT].

England is divided into five “cluster” areas – and CSC is the main contractor in three of the clusters. Hundreds of NHS sites in the upper half of England, from Luton to Newcastle-upon-Tyne will be reliant on CSC’s services and systems, if the NPfIT works as well as Whitehall officials hope.

CSC is also a major IT supplier to companies that include Schroders, Whitbread, insurance conglomerate AVIVA and BAE.

In the health service, CSC in December 2003 was only one of five Local Service Providers as part of the NHS’s National Programme for IT. It had won a £973m contract to supply systems and services until 2013. Its subcontractors included Isoft and Hedra, and then covered only the North West and West Midlands of England.

Its subsequent acquisition of the work of Accenture – which had two of the five NPfIT cluster contracts – means that CSC’s work for the NPfIT is worth nearly £3bn if all options are taken up, and it has to pay no major penalties..

Computer Weekly has asked CSC whether:

– CSC was facing a budget deficit for this financial year, in its northern region – including the NHS work – of at least £100m?

– bonuses this year for CSC staff in Northern Region were not being paid and if this could lead to defections?

– there have been top-level departures? We provided CSC’s press office with a list of job titles including some senior executives working on the NHS account.

– there has been a continuation of a two year freeze on training and what does this mean for NHS?

Below is CSC’s reply – which needs to be put into the context of the company’s wider business. It is one of the world’s largest IT services companies with 78,000 employees at 80 locations. Its worldwide turnover to the end of March 2006 was $14.6bn [£7.5bn] an increase of 4% on 2005’s figure. Its net profit in the same financial year was $634m [£326.2] a decrease of 21% on 2005.

CSC said in its statement to Computer Weekly:

“Of course, CSC is unable to comment specifically about our financial performance at a country level. Our global performance at Q3 showed revenue and new signings up on last year and margins at around 6%. Our European business overall has experienced a challenging time in recent years, particularly outside of the UK.

“The UK has benefited enormously from our extension with the NHS which, together with one or two other recent signings will support our growth into next year and beyond. Regarding bonus payments, all such payments are of course discretionary and therefore determined by our ability to meet targets set out at the start of each year.

“Achieving the current years targets is challenging however, in particular given the significant investments we have made in successfully securing large scale re-competes this year such as Schroders, MBDA, Whitbread, AVIVA and BAE Systems. All of these will provide us with a strong platform for growth going forward. We are very satisfied with our performance on the NHS contract.

“In parallel, we have implemented a wide ranging restructuring programme designed to improve efficiencies in our business and feel confident in our ability to grow the business profitably in the future. As a result of the changing market dynamics we are responding with new approaches to our go to market model and elements of our delivery organisation.

“As a result of this, just over 1000 staff have left the business, either through early retirement or voluntary redundancy – which, within the context of an organisation of over 9,000, this has necessarily included some senior executives leaving the business. The roles that you describe as having departed are in part incorrect; those that are correct have mostly departed in recent weeks or months as part of the restructure or have taken early retirement with succession plans already in place. Specifically, our UK CEO has indeed decided to pursue his career elsewhere.

“At the same time we are recruiting at all levels in the UK organisation and, as well as a group of 300+ talented staff joining us from Accenture in January as part of our NHS extension, we have a number of other senior level executives coming on board in the New Year. We are ramping up across the NHS programme significantly in the next few months across all skill areas and at all levels, and have a strong leadership team in place to deliver against our new commitments.

“Overall attrition remains lower than 12 months ago with the lowest levels in Europe being experienced in the UK.

“We will continue to invest in training – there is no ‘freeze’ as such – and we are developing and rolling out programmes across our organisation, both business and technical. The NHS account in particular is developing its own ‘NHS Academy’ designed to provide all staff working on the programme with the necessary knowledge and skills to ensure success.”

CSC’s statement may strike some as more defensive than revelatory but the company deserves credit for at least seeking dilgently to answer media questions. Most of the other suppliers to the NHS’s IT programme do not.