BBC's £2bn technology sell-off could be last of its kind in the UK

The BBC's £2bn IT deal with Siemens Business Services announced last week is likely to be the last of its kind, according to...

The BBC's £2bn IT deal with Siemens Business Services announced last week is likely to be the last of its kind, according to Anthony Miller, research director at Ovum Holway.

The contract includes the sale of the broadcaster's technology subsidiary to Siemens and the signing of a 10-year outsourcing deal with Siemens for IT services.

In the past decade several IT departments have been spun-off into separate businesses. In the mid-1990s Cadbury Schweppes' IT division was sold off and became outsourcing supplier ITNet. In 2001 the London International Financial Futures and Options Exchange hived-off its IT division as a fee-earning subsidiary.

"The idea of the BBC selling off its IT services arm and it appearing as [part of] an IT services contract is likely to be one of the last deals of its kind in the UK," said Miller.

"I cannot think of any other UK firms with independent IT subsidiaries that are considering selling them off or bundling them in an outsourcing deal."

The outsourcing arrangement, which will be finalised in the autumn, poses a number of challenges to both the BBC and Siemens Business Services, including size of the deal, the need to achieve annual cost savings of £20m-£30m, and the BBC's roll-out of digital technology.

Tom White, managing director at Siemens Business Services, said his company had a strong track record in large public sector IT outsourcing deals. "In 1990 we took over the entire back office of National Savings and 4,000 staff under Tupe [employment legislation]," he said.

Siemens' performance at the Passport Agency was severely criticised by the National Audit Office in 2001, but White said, "Now the Passport Service is providing one of the fastest [service] mechanisms in the Western world."

Siemens also has a number of other media outsourcing contracts, White added.

Siemens and the BBC are likely to face opposition from technicians' union Bectu, which is consulting its members about taking industrial action over the deal. The union claims to have seen secret plans for redundancies.

White said Siemens was in ongoing consultation with Bectu and staff at BBC Technology.

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