Thames Water has awarded LogicaCMG a £22m, seven-year IT outsourcing contract to support billing and income operations for Dwr Cymru Welsh Water.

LogicaCMG has won the IT and call centre support contract, aimed at reducing operational costs, following Welsh Water's earlier decision to outsource its billing and income operations to Thames Water.

Under the terms of the deal, the IT services firm will manage and develop business applications, host mainframes and servers, and support voice and data networks used by Welsh Water's call centre near Cardiff.

The IT systems are used to help distribute bills to, and process payments from, 1.2 million households and 110,000 business customers in Wales and bordering areas. They will be supported from LogicaCMG's outsourcing centre near Bridgend.

More than 360 employees, including 140 call centre staff, will have systems maintained through the contract.

'The key for us is value for money, business continuity and LogicaCMG having a sound understanding of the systems that we use for Welsh Water,' said Julia Cherrett, customer operations director at Thames Water.

'The contract will focus on supporting the call centre and back-office functions that we provide for billing and cash collection services.'

Thames Water plans to use the outsourcing deal to cut IT overheads and support costs. It will start an upgrade and consolidation programme later this year that will halve the number of servers used by Welsh Water.

Fujitsu mainframes will support billing applications, and upgrades to printing systems will reduce billing costs, says Cherrett.

Thames Water also plans to work with LogicaCMG to improve customer services and introduce new technologies that could reduce the cost of meter-readings.

'We hope to bring some innovation and improvement through the LogicaCMG contract which can help drive customer service. We are looking for technological innovations for our meter reading, call centre and customer information systems,' said Cherrett.

The contract builds on an earlier IT outsourcing contract that LogicaCMG held directly with Welsh Water.