Did HMRC scrap offshore idea after leak to media?

Capgemini has confirmed in an internal message to its staff that the idea of outsourcing some of its work for HM Revenue and Customs has been “debated and explored” – and there are no plans to change the contractual position to allow this to happen.

It says that the “Aspire” outsourcing contract with HMRC – which is worth about £8.5bn over its life – prohibits any aspect of the work being delivered from outside of the UK.  

In a message to Capgemini employees who are working on the Aspire contract, the Capgemini Aspire CEO says:

“Although the concept of offshoring has been debated and explored, there are no plans to change this contractual position as part of Quantum.”

Last week Computer Weekly revealed that HMRC and its two main IT suppliers Capgemini and Fujitsu were looking at ways to cut the costs of the department’s IT budget by about 30%, about £205m a year, as part of what is called Project Quantum.

One of the Quantum proposals was to outsource some future tax work to India where Capgemini employs 18,000 people.

After our article was published, and was followed by The Times, Daily Telegraph and Daily Mail, and BBC and commercial radio, the CEO of Capgemini’s “Aspire” team wrote:

“To all Capgemini Aspire employees

Response to media reports today

“You may well have read – or watched – media reports today about Project Quantum, the work initiated by HMRC to streamline and reduce the cost of all its IT services.

“As HMRC’s strategic IT partner, we are working closely with the Department to continue achieving sustainable value for money for the work we do.

“Discussions about the Aspire aspects of Project Quantum have been underway for some time, and although good progress is being made between Capgemini, Fujitsu and HMRC no firm agreements have yet been arrived at. Once we have agreed any changes, we will naturally share them with you.

“The media coverage included reference to offshoring sensitive data. HMRC has strongly refuted claims that UK taxpayer data could be processed in India and most press reports carry this correction.

“As you are all aware our contract prohibits delivery of any aspect of Aspire from outside of the UK.  

“Although the concept of offshoring has been debated and explored, there are no plans to change this contractual position as part of Quantum.

“I should like to take this opportunity to remind you that, if contacted by the media, you should not make any comment, but ask the caller to contact the HMRC Press Office directly …”

**

Did the Government rule out outsourcing some future tax work to India as a result of national media interest in the possibility of sensitive tax records being sent overseas?

This is the chronology of events:

Spring/Summer 2009: HMRC staff heard that proposals to outsource sensitive tax records to India were being discussed as part of “Project Quantum” – a plan to make savings of at least £200m a year on the IT budget. Senior managers indicated that nothing had been ruled in or out.

28 July 2009: Computer Weekly put details of the Quantum project to HMRC’s press office. We said to HMRC that it was going to be difficult making the proposed savings of more than £205m a year and that there was a “proposal to look at the potential for offshoring some of the work”. We asked for HMRC’s comment.

29 July: HMRC gave us a statement which did not answer the point about offshoring. Its statement said only: 

“HMRC is constantly looking at how it can provide better value for money.   Project Quantum is specifically focused on value for money in the IT field.  It covers all aspects of how IT is provisioned and used so it is covering business change as well as how we work with Capgemini under the Aspire contract.  As far as the Aspire aspect is concerned, we are working collaboratively with Capgemini to achieve lower costs and better ways of working.  That work is currently ongoing so we cannot comment in detail.”    

4 August: Journalists working for national newspapers, news agencies and broadcasters contacted HMRC to ask about an article to be published on ComputerWeekly.com on the possibility of sensitive tax work going abroad. HMRC’s press office was under pressure to issue a public statement. It could either deny that outsourcing overseas was being considered, or it could be vague. As the national media was involved, the HMRC PR response needed to be cleared by a minister. Sometimes, at this stage, ministers are given a choice of statements to approve.

4 August: Hours after receiving calls from the national media, HMRC issued a denial.  It told  news organisations that offshoring tax records was “simply not on the table“.

5 August 2009: Capgemini Aspire CEO sent a message to “all Capgmini Aspire employees”. It said: “Although the concept of offshoring has been debated and explored, there are no plans to change this contractual position as part of Quantum.”

A similar message was sent to Fujitsu staff who are working on the Aspire contract.

7 August: Staff at HMRC told us that offshoring talks were no longer on the department’s agenda. The decision to rule it out had been taken, at least for the time being.

**

Comment:

It’s perfectly conceivable that ministers would make a swift decision to rule out outsourcing to India, to preempt speculation on a sensitive political matter in the national media.

There’s also every chance that ministers had no idea what was going on, or what discussions were taking place, until the media followed up our article.

Knowledge is power, which is one reason it doesn’t all that often cross from the civil service to ministerial inbox.

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I notice you didn't post all of my last comments - what happened to freedom of speech?

What you haven't grasped is that you reference the outsourcing of "sensitive tax records". There have never been and never will be plans to do this - this is very different from offshoring development work, which has been discussed.

You should also check your facts on offshoring - it is already widely in use within central Government (e.g. DWP, NHS ...) and recently ratified as an efficiency opportunity to be explored further by the CIO Council. This isn't news - what you should be reporting is the fact that we are saving the taxpayer huge amounts of money through programmes like Quantum.

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Thank you for the comments.

Everything you said in your first post was published on this blog except the final sentence which used a word some would find offensive.

HMRC's press office in its conversation with journalists has been trying to differentiate "outsourcing" from "offshoring, giving the impression that outsourcing may be a step too far and offshoring is OK.

Is there such a big difference between the two terms in the minds of readers?

It's interesting if, as you say, only IT development has been discussed. I haven't yet seen any written evidence that this is the case.

Capgemini's message to staff did say that the Aspire contract bans any aspect of the contract from being delivered outside the UK. This would seem to include IT development work.

The message said: "As you are all aware our contract prohibits delivery of any aspect of Aspire from outside of the UK.

"Although the concept of offshoring has been debated and explored, there are no plans to change this contractual position as part of Quantum."

We at Computer Weekly always welcome documentary evidence to support things that people say to us. The HMRC articles have all been based on internal documents we've received.

Anything you can email to me which shows that offshoring has been recently ratified as an efficiency opportunity to be explored further by the CIO Council I'd welcome.

Again, I'd appreciate any written evidence you have on how you're saving the taxpayer huge amounts of money. That, I agree, should be reported.

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