The Financial Services Authority (FSA) is outsourcing its IT infrastructure and service delivery to Fujitsu in an £80.8m eight-year deal to transform the organisation’s technology performance.

The deal, which includes a no penalty exit clause after five years and £56.2m, is part of a larger IT transformation programme the financial regulator launched in August 2005.

FSA chief information officer Darryl Salmons told Computing the contract will enable the organisation to become a top-performing IT department in its industry sector by September 2008.

‘Outsourcing will rationalise and virtualise our IT, giving us a more cost-effective infrastructure while improving our capability and flexibility,’ he said.

The Fujitsu deal will improve service levels with the provision of 24-hour helpdesk support and improvement of overall management and delivery of IT services, says Salmons.

‘Work will include a local area network and desktop refresh to deliver more flexible and mobile working, and we are rationalising our data centre to a dual Fujitsu environment,’ he said.

The contract will generate cost savings by reducing third party supplier contracts and enabling compliance through greater monitoring.

The financial regulator is also outsourcing its application management to Xansa in a three-year deal worth £5.1m.

‘Fujitsu will run the helpdesk facilities and infrastructure with responsibility for first-line user support, directly interfacing with Xansa for reported application issues,’ said Salmons.

Xansa’s contract builds on an agreement with the FSA for application development.

‘They will provide application support from India with demanding productivity and availability targets which carry strong penalties if they do not meet them,’ said Salmons.

Some 41 FSA employees will transfer to Fujitsu and 11 to Xansa, but 104 in-house IT staff will remain.

Nigel Roxburgh, research director at the National Outsourcing Association, says finding the right service delivery partner is the most critical factor in the success of any outsourcing deal.

‘It is key to select a partner with the right cultural fit for your organisation because that partner needs a deep understanding of your organisation when creating a virtual team,’ said Roxburgh.