HMRC saving costs with IT Shakedown

Date: November 03, 2009

HM Revenue and Customs (HMRC) will save £110m a year as a result of revising its IT service contract with lead supplier Capgemini.

The original contract known as 'Aspire' was agreed in 2004 when HMRC integrated the two separated IT contracts before Her Majesty’s Customs & Excise merged with The Inland Revenue, leaving some legacy systems performing duplicate functions.

The new arrangement involves price reductions, modernisation and simplification of the current IT systems which include resizing 40 computer systems and closing down a number of data centres. The projected £110m savings will be realised from 2011 and will be added to the further £70m annual cut that HMRC negotiated with its IT contract in 2007, when the Public Accounts Committee ordered HMRC to obtain more value out of the Aspire contract after it was revealed that Capgemini would receive more that £1.1bn net profit from the contract!

HMRC spends about £740m a year in IT. The “Aspire” contract is one of the biggest outsourcing deals, worth £2.6 bn when was first signed in 2004 and now with the new arrangement extended until 2017 reach a life-time value of £8.5bn.

HMRC CEO, Leslie Strathie, said “HMRC and Capgemini have worked together to achieve outstanding savings for the department. This is just one way in which HMRC will be reducing operating cost and it signals our intent to bring IT cost down as announced in the 2009 budget”.