The IT subsidiary at Southern Water will be the first to go in a rationalisation imposed on the water utility by its owner, Scottish Power.

ICL's outsourcing company, CFM, will buy Worthing-based IT Southern and its 121 staff for an undisclosed sum at the beginning of April. As a condition of the purchase, CFM will provide IT services to Southern Water for up to three years.

Scottish Power bought Southern Water last year. It is selling off all 14 of the utility's subsidiary businesses.

CFM is already contracted to manage Scottish Power's mainframe systems in Glasgow and its subsidiary electricity utility, Manweb. Southern Water said that, based on its experience with CFM, it is 'confident' that both companies can achieve their objectives.

IT Southern uses ICL mainframes and Sun Micro-systems workstations to provide a billing system for water utility companies. It also offers IT and training services to local government, manufacturing, legal and accountancy sectors. In 1995 it acquired its own subsidiary when it bought a City-based training firm.

Southern Water said all existing contracts with IT Southern will be maintained, and the business will remain at its existing premises for 12 months.

The IT subsidiary's staff will be offered a choice to work for CFM or find new employment at Southern Water or Scottish Power.

A spokeswoman for Southern Water, said: 'Scottish Power's focus is on the core business.'