Swansea ditches outsourcing plans

Swansea City Council has scrapped plans for the second phase of its outsourcing contract with Capgemini because of cost.

Swansea finally inked the £83m 10-year contract for phase one of the service@swansea project last year after a bitter 18-month battle with IT staff and trade union Unison over whether workers would be permanently transferred or seconded to Capgemini. The £83m figure includes an extra £40m investment by the council on top of its existing IT budget over the 10 years.

The original projected cost-savings for both phases of the outsourcing deal were £72m, of which £26m was for the first phase covering IT support and the replacement of 30 outdated IT systems for its finance, procurement, personnel and payroll functions. Currently Swansea has identified and signed off £7.4m of the £26m cash savings targeted in phase one.

But the council's cabinet agreed with a recommendation this week not to proceed with phase two of the contract because of the cost - although Capgemini claimed this was actually lower than the original quotation. The second phase was to improve customer access to services through a new call centre and website to provide a single point of contact for council services.

The council said it will seek an alternative, incremental approach to improving access to services instead and Chris Holley, council leader, called it a "sensible and prudent" decision.

He said in a statement: "Continuing reviews of our option to sign up to a Capgemini-managed phase two have shown that there is not a solution that is acceptable to the council. There are significant budget pressures this year and we must cut our cloth according to what we can afford."

Capgemini said it remains "firmly committed" to the council and to Swansea.