BBC to sell off IT

Outsourcing but not offshoring is the stipulation to the final eight bidders for an IT services contract worth 3.59 billion over ten years from the British Broadcasting Corporation (BBC).

The shortlist of final bidders includes CSC, Fujitsu, EDS, Capita, Accenture, IBM, Logica, and Hewlett-Packard.

The BBC technology group includes BBC Technology Direction, the organization responsible for buying and specifying technology services to approximately 30,000 desktops, and BBC Technology Ltd., the IT arm that delivers content and technology to the BBC as well as to third parties such as Direct TV and ESPN.

The winning bidder will be required to buy the technology group, essentially keeping its 1,400 employees. The Technology Direction group, numbering only about 50 employees, will stay with the BBC.

John Varney, CTO of BBC Direction, put the value of BBC Technology in the “high hundreds of millions of dollars.”

Varney said while off shoring application development will be permitted everything else must stay within Great Britain. All services, help desks, and network support will be inside the United Kingdom.

“The BBC is part of the UK’s cultural heritage. It is important that services be delivered from inside the UK and the future of the 1,400 staff must be assured,” Varney said.

By outsourcing IT the BBC expects to realize an annual savings of between $35.8 and $53.8 million. Currently, it is costing the BBC about $359 million to deliver all services that include IT, telephony broadcast engineering, and satellite.

Varney said that there were a number of factors that contribute to the projected cost savings in outsourcing its current operations. Among the factors was a consolidation of networks and servers around a central approach, currently 800 servers are distributed throughout the United Kingdom. The commoditization of IT platforms also plays a key role in going to outsourced providers as well as savings in payroll.

“We can get much greater benefit from the huge economies of scale than a third party can deliver,” Varney said. A third party that handles millions of desktops can do it more cheaply than one company that handles only 30,000 desktops.

BBC is expected to announce the final three bidders by the first week in May.