Whitehall and suppliers in 'old boys club', alleges Indian offshorer

The government and a small group of IT suppliers operate an "old boys' network" that controls 90 percent of public sector procurement, according to scathing comments made by the head of one of India's largest outsourcing firms.

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The government and a small group of IT suppliers operate an "old boys' network" that controls 90 percent of public sector procurement, according to scathing comments made by the head of one of India's largest outsourcing firms.

Vineet Nayar, chief executive at HCL, told the Financial Times that the companies had a "stranglehold" on the market, with almost no room for other suppliers to participate. Weeks away from a general election, the issue is becoming increasingly heated, and the Conservative party has insisted that it would open up the market to more companies if it wins on 6 May.

Nayar did not name the companies he alleged to be dominating the market, but Patrick Dunleavy, chair of the public policy group at the London School of Economics, told the newspaper that five companies including HP-EDS, IBM and BT run an estimated 90 percent of government contracts. Other suppliers commonly selected by the government include Fujitsu, Logica, Civica, CSC and Accenture.

Offshoring to HCL instead of using existing suppliers would result in cost savings of up to 20 percent on contracts, Nayar claimed. But he said the company was rarely shortlisted for work by UK public sector bodies.

“Your contracts are bad, your competition is limited," he added. "All we are asking is for a level playing field.”

HCL, which has 60,000 employees, has large private sector clients including GlaxoSmithKline, Rolls Royce, News International, Vodafone and KPMG. It inherited some public sector work, after acquiring Axon in 2008, including contracts with the Metropolitan Police, Transport for London, and Birmingham and Manchester City Council, the FT noted.

The Office for Government Commerce, which guides Whitehall on procurement, told the newspaper that government departments have to “adhere to strict legislation set out by governing entities such as the European Union and the World Trade Organisation”.

Contracts "should be advertised in a transparent way that avoids discriminatory clauses", it said, but added that if India joined the World Trade Organisation procurement agreement it would benefit "more directly" from fair procurement legislation.

Offshoring of public sector work remains controversial, particularly as UK-based IT contractors are suffering in a difficult job market. But a number of projects have been sent abroad in recent months, as the government slashes spending, including a £600 million pensions processing deal with Tata Consultancy Services in India. The company is also developing the new child support and maintenance scheme systems.

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