Capgemini revenues to drop by almost one-tenth when HMRC contract expires in 2017

HMRC plan to scrap Aspire outsourcing contract in 2017 will force Capgemini's global revenues down by almost one-tenth - unless it wins the new deal

Capgemini, the giant French IT outsourcing company, is set to lose almost one-tenth of its global revenues when the Aspire outsourcing deal with HMRC is scrapped in June 2017.

HMRC is currently weighing up its options and, according to HMRC chief digital and information officer Mark Dearnley, the organisation currently has "no plans" to extend the deal beyond its current June 2017 deadline.

Termination of the deal will mean that Capgemini loses just under nine per cent of its global revenues - and a whopping 60 per cent of its UK public sector revenues.

The admission was made by Andrew Levitt, chief executive officer of Aspire, Capgemini, in evidence before the UK Public Accounts Committee this week.

However, Levitt was sanguine about the company's prospects, despite the risk of losing out to a rival when HMRC puts its IT needs up for tender in a new outsourcing deal.

"Capgemini is a large global organisation. It is very resilient and we have been aware of 2017 for a long time. It has all been factored into our plans. The second point... is that the Aspire contract will go out to tender in some form. We are not party to that planning at the moment but we would fully anticipate bidding for work ourselves," said Levitt.

When Aspire is discontinued, Capgemini stands to lose as many as 2,500 employees as Aspire staff either shift in-house or, more likely, join new employers under a new deal - should Capgemini fail to win the tender.

The cessation of Aspire will also affect sub-contractors, including Fujitsu, who employ some 1,400 staff, and services consultancy Accenture. In total, there are 348 subcontractors also working under Aspire. However, Capgemini and Fujitsu will be most affected. "If you look at the 4,000 people, the majority are Capgemini and Fujitsu," said Levitt.

While the Aspire deal was renewed for a further five years in 2012, HMRC admits that costs increased by more than expected. Between July 2004 and March 2014, Aspire cost £7.9bn instead of the expected £3.6bn-£4.9bn, according to the National Audit Office.

Not only is HMRC hoping that a re-tender in 2017 will cut costs, but it is planning to break it down into a series of smaller contracts.