Capgemini receives contract extension from HMRC

11 October 2019 3 min. read

HM Revenue & Customs has announced it has extended its contract with Capgemini to supply IT services for a further two years. While the news takes the firm and client’s continued relationship to 18 years, however, a key change to the contract will see its responsibilities dispersed to other, smaller firms over the coming 24 months. 

Capgemini is in a transformative state at present. While the firm grew sales in its most recent fiscal year to $14.51 billion, an increase of 5.4% on the $13.78 billion of 2017, Chief Executive Officer Paul Hermelin is set to step down in Spring 2020. Current Chief Operating Officer Aiman Ezzat will take the reins in May, with the firm taking on a new executive structure. 

While the firm continues its organisational transition, however, it has secured further continuity with one of its long-standing contracts in the UK public sector. The UK Government has extended its HM Revenue & Customs (HMRC) IT services contract with Capgemini for two more years, taking the contract’s length to 18 years. 

Capgemini receives contract extension from HMRC

HMRC and Capgemini have a long history of working together that will require time to replace. The department has worked with Capgemini on what was previously known as the Aspire contract for 15 years. The deal sees Capgemini mainly provide data, digital and cloud technologies, alongside applications management services.

The consultancy said in a statement, “As part of this extension, Capgemini will also support HMRC in its strategic transformation programmes and in growing HMRC’s own IT capability.”

There is one key change, though. The contract, which began in 2004, will now run until the end of 2021, but it has been restructured to secure the current services while enabling HMRC to continue with its plan to break the contract down among more suppliers in future. HMRC hopes this will provide the flexibility for it to adopt the latest technologies when outsourcing, as SMEs and start-ups continue to drive innovation in the technology space. In this environment, organisations are looking to avoid being trapped in ironclad contracts which could prevent them harnessing new developments. 

Commenting on the modified contract, an HMRC spokesperson said, “We’re evolving our supply chain to give us greater access to innovation in the marketplace, and have reshaped our relationship with Capgemini. The revised agreement provides continuity for some of our key services while we continue to progress our technology sourcing programme, which will increase our flexibility to work with a growing range of providers.”

Ultimately, the changing to a flexible deal, committing HMRC to a phased exit from a single overarching contract in IT, could deliver major dividends for the tax office. By breaking it down into several smaller and more agile contracts, HMRC believes it will be able to save £200 million per year on outsourcing by 2020-21. This fits with a growing trend in the public sector, as well as clients of consultancies in general, with an increasing number of organisations opting for independent and boutique advisories as they are often able to deliver a similar standard of work to large firms, but for a far lower price.