BBC outsources to save millions

Siemens Business Services sets out its plans to achieve the projected cost savings.

The BBC is aiming for cost savings of almost US$40 million a year through its £2 billion (US$3.8 billion) technology outsourcing deal with Siemens Business Services.

SBS acquired the BBC Technology, the Beeb's commercial IT unit, for an undisclosed sum last year as part of the 10-year outsourcing agreement.

The £20 million (US$38.4 million) a year savings, which will be ploughed back into programming, only represent a 10 per cent return for the BBC compared to typical outsourcing deals that would aim for something closer to 20 per cent.

But BBC Technology CTO John Varney said it was about a good cultural fit with a supplier who "got what the BBC is" and not just about driving them down to unrealistic levels of savings.

"All the bids were of similar levels but we didn't just want to screw them down on costs. I had to be happy that they would be able to achieve their margins," he said.

Varney was speaking at an SBS event at BBC TV Centre in London and said BBC Technology as a standalone commercial unit had been hampered by the limitations of its size.

"We realised we needed economies of scale. It was a hard decision to outsource and a brave decision by the BBC," he said.

Around 1,400 BBC staff have transferred to SBS as part of the deal but the start of the contract has been delayed by six months to allow for a smooth transition period. SBS will now start running the BBC's IT, which includes 28,500 desktops over 267 sites, from April this year.

SBS laid out its plans for achieving the cost savings, which include the move to a single IP-based network for voice and data, utility-based storage, and rationalisation of servers, data centres and applications.

But Barry Yard, executive director at SBS, ruled out job cuts and the use of low-cost overseas IT resources.

"We made it absolutely clear to the BBC we will not be offshoring," he said.

SBS also declined to comment on rumours in the German media that its parent Siemens was considering selling off the IT services arm. But the Varney said he was confident that the contract provides enough protection for the BBC and added that he had heard nothing about SBS' future that caused him concern.