Siemens Business Services, the IT outsourcing and services division of Siemens AG, has beaten rival EDS Corp to one of the biggest UK government outsourcing contracts ever seen. SBS has won a 1 billion pound, 15-year deal to manage the back office and administrative functions of National Savings, the government department which offers personal savings products (backed by the Treasury) which help to fund the UK’s national debt. National Savings currently has 30 million customers and 63 billion pounds of savings under its control. The deal will see SBS quadrupling its staff numbers in the UK as it takes 3,800 former government employees onto its payroll from offices in Glasgow, Durham and Blackpool. This is one of the biggest transfers of employees from the public to the private sector ever seen in the UK. At present, SBS employs just 1,200 staff, many of whom work at the UK passport office, another of SBS’s successes under the government’s Private Finance Initiative. In winning the National Savings deal, Siemens has also committed itself to minimizing lay-offs because all former government employees transferring across to SBS will retain their current terms and conditions of employment. Job security appears to have been central in the government’s decision to go with Siemens and not EDS. However, SBS says there will inevitably be a decline in the number of staff required to run National Savings’ operations after modernizing and re-engineering of the business commences on April 1 1999. SBS says it hopes to provide new jobs to offset the planned decline in the number of people needed to support National Savings operations, although it stressed that this would be dependent upon winning new business. In 1998, SBS grew its business by 27% before swallowing this latest contract. Announcing the deal, Patricia Hewitt MP, Economic Secretary to the Treasury said the event was, a milestone in the government’s policy of cooperation between the public and private sectors. She added that the deal is in keeping with government policy of moderating public services. National Savings products will continue to be guaranteed by the UK government, which will also remain in control of the terms and conditions of all savings products offered to the public.
