Indian outsourcing deal cuts Thames Water's bills by 20%

Thames Water, the UK's largest water company, has cut its IT maintenance bill by 20% by outsourcing responsibility for the work...

Thames Water, the UK's largest water company, has cut its IT maintenance bill by 20% by outsourcing responsibility for the work to an Indian software firm.

The savings, worth more than £1m, come from a decision to hand over the management of Thames Water's pool of support and maintenance suppliers to Hydrabad-based software firm Wipro last year.

The Wipro contract has also led to improvements in quality and innovation, said Alasdair Macarthur, IS partner development manager at Thames Water. "I always try to put price last. It would be very east to throw everything at India because it is cheap. And it is not because it is cheap - it is cost-effective," he said.

Thames Water believes it is getting better value from lead suppliers such as Wipro by asking them to work in partnership with rival suppliers in other areas of IT work.

Wipro, for example, is responsible for managing the work of maintenance pool suppliers Schlumberger Sema, Xansa and Science Systems. However, as a member of Thames Water's development pool of suppliers, which is managed by PA Consulting, Wipro also works in partnership alongside these same suppliers.

The contract for managing a third pool of IT service suppliers is out for tender and is expected to be awarded within a matter of months.

"It is straight business logic to have three partners who have to work in two ways, both in the responsibility for their particular domain, or horizontally, working together in partnership," said Macarthur.

"Engaging Wipro as lead partner in acceptance testing, serves as an extremely useful check and balance to the development partners. At the end of the day that is driving up quality on our estate. It is reducing downstream errors and the cost that goes with that."

Thames Water did not set out to appoint an Indian supplier, but Wipro, one of 84 companies to respond to the utility's advertisement in the Official Journal of the European Communities, won the contract against stiff competition.

"The different culture and the physical proximity caused us to ask slightly more questions of them than we would of other people," said Macarthur. "We did a number of reference site visits to companies like Thomas Cook to really understand the nuances of an offshore relationship. Without exception, the references were positive."

Despite the success of the project, Thames Water is keen to win greater savings in the future. "Saving of 20% are a good start. But let's make it 25% or 30%. Let's use the full gamut of Wipro's quality accreditation to drive up quality," said Macarthur.

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