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DWP insourced 400 staff from HPE into new IT services subsidiary

New arrangement allows Department for Work and Pensions to pay higher base salaries to encourage staff expecting private sector wages

The Department for Work and Pensions (DWP) has insourced about 400 staff from Hewlett Packard Enterprise (HPE) as part of bringing a major outsourcing deal for application development, maintenance and support back in house.

The move was completed in March 2017 without any external announcements. The former HPE workers are not employed directly by DWP as civil servants, however.

The department set up a subsidiary organisation called Benefits and Pensions Digital and Technology Services (BPDTS), which only provides IT services to DWP’s digital group. This arrangement allows BPDTS staff to work in the public sector but at higher base salaries than regular civil servants, overcoming the issue of different pay expectations between private sector firms and Whitehall.

BPDTS will also recruit IT experts from the open market to help provide further services to DWP Digital. BPDTS is a not-for-profit operation that was established in late 2016, but DWP did not explain its purpose at the time.

Mayank Prakash, chief digital and information officer at DWP, said this arrangement will help the department to source the skills it needs in a competitive marketplace.

“Our commitment to transforming DWP’s digital services – at pace and on a massive scale – means we have to be imaginative in how we access capability from the highly competitive marketplace we operate in,” said Prakash, in written answers to questions submitted to DWP by Computer Weekly.

“We will continue to develop and recruit talent in the civil service, and to access expertise from contractors and flexible suppliers where this makes business sense. In addition, DWP has set up BPDTS, a dedicated service provider, to allow us to access digital technology, data and security expertise. BPDTS is a public sector organisation, but offers a different employment package for those who would prefer a higher base salary and lower pension with a similar overall value to civil service remuneration,” he said.

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“This is a new arrangement for DWP, but we’re used to an environment where experts employed by Digital Group and many other partners work collaboratively, united by a shared commitment to transform digital services for millions of people.”

HPE staff were transferred to BPDTS under Transfer of Undertakings – Protection of Employment (TUPE) regulations, which meant they maintained their existing contractual terms and conditions.

HM Revenue & Customs used a similar arrangement to insource 250 staff from Capgemini in 2015, as part of the break-up of its £800m-a-year Aspire outsourcing deal.

Insourcing important to IT strategy

Prakash said the insourcing was an important part of DWP’s plan to take more control over its IT than previous large-scale outsourcing deals allowed.

“Large contracts of the past are being replaced with flexible relationships and targeted insourcing of selected services. The insourcing of this specific work, completed early this year, was an important milestone in our journey to take greater control of our digital future. We continue to work with startups and industry-leading partners to undertake product development, maintenance and support,” he said.

Prakash said there were no current plans to insource other staff from outsourcing contracts, but added: “We’ll look at opportunities on a case-by-case basis”.

The creation of BPDTS has caused controversy with the Public and Commercial Services Union (PCS), which represents civil servants, because the new organisation has refused to recognise any trade union. PCS claimed there is “no real distinction” between DWP and BPDTS, given it exists purely to provide services to the department, works from DWP offices, and reports to the secretary of state for work and pensions

“We will not accept this attack on fundamental trade union rights, and [PCS] is campaigning to get trade union recognition and full collective bargaining for our members,” said PCS in a statement in October 2017.

Government commercial experts warned earlier in November that exiting large IT outsourcing contracts can take up to four years. Government policy encourages Whitehall departments to move away from the monolothic outsourcing arrangements that were once considered best practice.

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