§ Mr. BercowTo ask the Secretary of State for Work and Pensions, pursuant to his answer of 6 December 2001,Official Report, column 514W, on outsourcing, what the estimated size is of the reduced cost to his Department from the outsourcing of IS and IT services. [30140]
§ Mr. McCartneyThe Department first outsourced its IT data centre and mainframe operations in 1995, and subsequently outsourced the development and maintenance of its IT systems in 2000. Costs and benefits associated with the outsourcing of all of these IS/IT services were forecast on the basis of initial planning assumptions known at the time that the contract was let. A prudent approach was taken in the calculations in terms of spending on IT systems development and maintenance, and data centre and mainframe operational services.
Based on these factors, a positive net present value was delivered representing a reduction of 3 per cent. in costs over the life of the contract. However, a fuller assessment of the actual financial impact of outsourcing is not available, since the contract is only in its early stages.
Additionally, this contract cannot be viewed within the context of cost reduction alone. Various non-financial factors were also of considerable importance in the decision to proceed with strategic outsourcing. In particular, the transfer of high levels of risk associated with new IT development to the service provider.