UK govt set to outsource $ 1-bn project

Written by Rachana Khanzode | Goutam Das | Goutam Das | Mumbai | Updated: Feb 10 2011, 04:19am hrs
The United Kingdoms government will outsource Universal Benefits, a technology project estimated at 1 billion (around Rs 7,300 crore), opening up enormous possibilities for Indian IT firms such as Tata Consultancy Services (TCS), Infosys Technologies and HCL Technologies. This project is currently in the design stage and would run for the next three years, a cabinet officer from the UK government told FE.

The Universal Benefits project would include automating self service, the front-end of supply chain of services and data centre consolidation among others.

UKs central government is expected to spend about 6 billion in the coming year on public sector unit (PSU) contracts. The projects may also open up opportunities for mid-tier IT players as the UK government intends to grant about 25% of the total contracts in PSUs to smaller firms, starting with the Universal Benefits Project. Smaller firms on the table would give the UK government a bigger bargaining chip on pricing. The UK government spends about 16 billion on public sector contracts of which about 6.9 billion are spent by the central government. Next year, we are looking at a marginal decrease in the overall IT spend as we put measures in place to restrict spends, deputy government CIO and director of ICT strategy and policy, UK, Bill McCluggage said on the sidelines of the Nasscom Leadership Forum.

Last year, the UK government reviewed existing ICT projects and re-negotiated with the top 19 companies, including Indias top IT services firm TCS. However, we are giving away two major contracts this year including the new Universal Benefits projects worth about 1 billion and re-engineering the existing income tax systems project, he added.

The UK government, under prime minister David Cameron, has been slashing expenses and would prefer contracts with early returns on investments. The government is increasingly looking at spending in smaller packets and may award contracts in the range of 100 million. The Universal Benefits Project too would be outsourced in similar junks. We are taking preference for less than 100 million contracts rather than larger ones. Our front ended spends are going to be tight, McCluggage said.