Swansea City Council has pulled out of the second phase of an outsourcing programme with Capgemini after revised projections for the first tranche of work suggested it would not make anywhere near the original forecast savings.
The council signed an £83m deal to outsource its back-office functions and IT services to Capgemini late last year, following 18 months of wrangling with council IT staff, which included strike action by Unison members.
The second phase of the deal was due to create a new call centre and website front office to give local people a single point of contact with the council. But leader of the council Chris Holley said last week that work undertaken in the past year by Swansea and Capgemini had shown that the second-phase proposals were not affordable.
In phase one of Swansea's outsourcing deal, £7.4m of "cash realisable benefits" have been accepted as achievable over the 10 years of the contract, a council spokesman said. However, the contract will cost the council £40m more than its normal IT budget over its lifetime, and these revised figures led Swansea to rethink its plans.
Michelle Morris, programme director at Swansea City Council, said £26m was an overall savings target for the project, whereas the £7.4m figure was a specific saving from future budgets identified once technology had been rolled out. More savings would be identified as the roll-out continued, she said.
Peter Ryder, president of public sector IT managers group Socitm, said Swansea now needed to own up to any mistakes it had made in order to re-establish good relationships with its IT staff.
"It is quite a difficult thing to admit, but someone down the track has got to hold a hand up and say, 'We ploughed on without taking advice and now we have got to re-engage and open a dialogue'," he said.
Ryder, who was speaking in a personal capacity, said that too often problems were hidden or overlooked. "If somebody says, 'We got it wrong, but we have learned the lesson, now let's draw a line in the sand and have the dialogue,' that will often help," he said.
Since the deal was signed, 66 council staff have transferred to Capgemini. The supplier told Computer Weekly that it remained committed to phase one of the contract and still planned to replace many outdated systems and improve council efficiency.
Swansea signs 10-year deal