South West councils' shared services venture gets underway

Southwest One, a joint venture company formed in Somerset by two local authorities and IBM is now nearly fully operational, with over 650 staff transferring this week from Somerset County Council and Taunton Deane Borough Council.

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Southwest One, a joint venture company formed in Somerset by two local authorities and IBM is now fully operational, with over 650 staff transferring over this week from Somerset County Council and Taunton Deane Borough Council.

Alongside the ex-council staff, the firm also has 100 IBM staff working full-time in Taunton and a further 100 expected to transfer next year.

The final transfer of staff took place yesterday (3 December). Southwest One will deliver services including IT, finance, human resources and customer contact centres for both councils, which between them serve about half a million residents. However, under the arrangement certain functions will only serve one or other of the councils.

The two authorities have said they expect to save in the region of £200m over the course of 10 years on the venture, which is projected to cost £400m over that period. Savings are expected to be gained by streamlining complex processes such as procurement and negotiating more efficient contracts.

The venture is the first of its kind in the South West and hopes to build on successful shared services initiatives in other parts of the country. It includes a framework agreement entitling over 30 other public sector organisations to acquire similar services through the partnership.

Analyst group Ovum said recently the venture was "groundbreaking in its size, scale and aspirations for service delivery in the local government market. It is one of the largest outsourcing contracts signed to date in local government."

In terms of revenue splits, Ovum has said it understands that IBM will receive £200m of the total contract value over the life of the deal, with approximately £100m of that being paid upfront. The remaining £200m of the deal would be split between two more venture partners, HBS and Mouchel Parkman, it said.

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