BBC to sell £220m technology arm

Auntie wants to sell its BBC Technology to one of the big IT services firms. Whoever takes it on could, says the BBC, offer a far wider range of IT services to clients

The BBC is putting its technology division up for sale as it looks to engage one of the major IT services firms to run its tech operations.

The corporation announced on Thursday that it is putting BBC Technology on the market. Whichever company buys it will also take on the BBC's IT services contract.

BBC Technology, which currently provides technology services for the whole of the BBC, was created in 2001 as a wholly owned commercial subsidy. This meant it could also sell services to other companies, allowing it to win contracts from the likes of Hutchison 3G and American sports channel ESPN.

BBC Technology made a profit of £19m last year on a turnover £220m. But the parent company has now decided to find a larger partner that could, with BBC Technology as a subsidiary, provide a wider range of services. The BBC believes it can save between £20m and £30m a year by doing so.

John Varney, the BBC's chief technical officer, told ZDNet UK that the winning bidder will have to buy BBC Technology as part of the deal. He says that there has already been significant interest, and is hoping that a "global scale provider" will come forward to win both the contract and BBC Technology. "This isn't a reflection on the quality of BBC Technology's work," Varney insisted. "It's about economics of scale, and how the BBC can benefit from working with a larger technology services provider".

The alternative to a sale, the BBC says, would have been a rationalisation of BBC Technology resulting in "substantial job losses" from among its 1,400 staff.

The early speculation is that a firm such as IBM, Accenture or EDS could be the successful bidder for the BBC contact, and some BBC Technology staff are understood to be concerned that their jobs could be at risk after a sale. Varney, though, is keen to play down these fears. "We've got a very strong feeling about what is needed to operate the services we need. We're pretty confident that all the jobs will be transferred over after the sale," Varney said.

It's even possible that the wider UK IT market could benefit from the sale.

"BBC Technology isn't just an IT company. It also has skills in media production and content creation, which are generally missing from major technology service providers," pointed out Varney, who believes the sale could open up new markets for BBC Technology's future purchaser.