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Government offshores £600m pension processing to India

Government offshores £600m pension processing to India

Tata beats Logica to the new contract

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The government is set to sign a 10-year deal with Tata Consultancy Services, worth approximately £600 million, which will see the majority of processing jobs on a new pensions scheme located in India.

Some 60 percent of the back office administration and IT staff will be located offshore, as the Nest scheme for low to middle income households prepares for a 2012 launch. They will then continue the work as the scheme continues in operation. Public facing and data storage staff will be located in the UK.

Logica had also been in the running for the work, but withdrew in November. The contract will be formally signed in a fortnight.

The planned signing of the deal so close to an election immediately drew fire from the Conservative party, which said it had expected the contracted to be finalised after June. Nigel Waterson, Conservative pension spokesperson, told the Financial Times he was “taken aback” by the early signing, and insisted the Tories would hold a review of the scheme if they won the election.

But the Personal Accounts Delivery Authority, responsible for the scheme, said there would be a break point in the contract in seven months’ time. The deal would also have a £25 million cost of cancellation, it said, a cost far lower than many other large public sector deals.

Angela Eagle, the pensions minister, said in the FT that Whitehall had not “done anything that ties the hands of a future government.”

The contract win is another sign of offshoring's growing role in government IT . Last year, TCS also signed a £45 million deal to implement and run a child support and maintenance scheme based on Oracle Siebel software.

Separately, the British Council also announced plans to offshore 85 IT jobs. And in August, HM Revenue & Customs denied widely-circulated reports that it planned to offshore tax record processing.

In November, Cardiff Council signed a 15 year deal with Tata Consultancy Services, reportedly worth £150 million.

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