Cabinet Office awards £1bn shared services contract to Steria

The Cabinet Office has confirmed that it is outsourcing shared services, including IT, HR and finance, to Steria Limited as part of the Independent Shared Service 2 (ISSC2) programme.

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The Cabinet Office has confirmed that it is outsourcing shared services, including IT, HR and finance, to Steria Limited as part of the Independent Shared Service 2 (ISSC2) programme.

Steria had previously been named preferred bidder on the contract - potentially worth ‘in excess of’ £1 billion over 10 years - which led to a strike by civil service members of the Public and Commercial Services (PCS) union over the outsourcing plans, which include some work being offshored.

The supplier has been keen to highlight that the contract has been awarded to its Hemel Hempstead-headquartered division, Steria Limited, but the union’s fears arise from the fact that the company’s ultimate owner is French multinational Steria.

The aim of the contract is to take advantage of economies of scale, through the adoption of common processes and systems.

To this end, Steria will deliver a new ICT platform, and using its business intelligence technologies, it will use data from the new platform to drive savings and business efficiencies for central government.

As part of the contract, a new business called Shared Services Connected Ltd (SSCL) will be created, which Steria insists will pay UK tax and contribute to growth and job creation in this country. Steria Limited will own 75 percent of the joint venture, with the government holding the remaining 25 percent stake.

“SSCL will invest in technologies and skills to create UK centres of excellence, which will not only improve levels of service, but will stimulate innovation, create high-value jobs and develop skills in the UK,” Steria said.

1,200 staff transferred

Around 1,200 staff who currently work in the delivery centres for the Department for Work and Pensions (DWP), Defra and the Environment Agency will transfer to the new company today (1 November). UK SBS is expected to join by 2015.

PCS union has condemned the contract award, saying that the transfer of staff will involve significant restructuring, site consolidation and offshoring - all of which will lead to high levels of job losses.

The union said that work will be offshored to India, and it expects that only two or three of the existing government sites in Cardiff, Blackpool, Newcastle, Sheffield, York, Alnwick and Peterborough will remain open.

It added that while it had backed a strike on 25 October, the union had suspended further industrial action on 31 October as some progress had been made in terms of protections for members.

PCS general secretary Mark Serwotka said: "PCS condemns yet another government sell-off where they put profits before people. Civil servants will lose their jobs to boost the profits of a private firm.

“We will continue to challenge the decision to send work offshore especially from areas where there is already high unemployment."

Shared expertise

However, the government said that Steria had set out a “compelling vision”.

Cabinet Office minister Francis Maude said: “Steria Limited has set out a compelling vision for how they will work with us to help government deliver back office functions more efficiently and, ultimately, more competitively.

“It makes sense for government departments, agencies and public bodies to share services and pool expertise [so] they will be able to focus on providing services rather than managing back office functions.”

Meanwhile Steria Limited’s CEO, John Torrie, said that the company will use its experience in the NHS to deliver the benefits of the contract.

“Our joint venture with the Department of Health (DH), NHS Shared Business Services (NHS SBS) is a great example of how shared services, delivered at scale, can enable tangible savings for UK government.

“We will be bringing this experience, as well as our extensive private sector knowledge, to bear in the new Shared Services Connected Limited organisation.”

ISSC2 (Independent Shared Service 2) is part of the Civil Service Reform Plan, which aims to consolidate and deliver government back office functions more efficiently, to deliver savings of between £400 million and £600 million a year.

The ISSC2 initiative is comprised of a number of existing shared service centres, the largest of which is operated by the DWP. ISSC2 will deliver payroll, HR, finance and procurement services to DWP’s existing customers, with more government departments joining in due course.