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By Felicity Ussher, 20 May 1999 14:22

NEWS IT services group, Sema, is expecting business outsourcing - not pure IT - to drive over half its UK operations in the next few years. Analysts have long predicted a trend towards business contracts, as traditional outsourcing revenues decline, but Sema's technical director, Mel Earp, looks like the first to make it happen. Earp told Silicon.com: "This strategy gets us closer to our customers' business. Everyone knows the margins in IT outsourcing have been going down." Currently, only 10 per cent of Sema's outsourcing contracts cover day-to-day business processes. Its main clients are Benefits Agency Medical Services and the Rail Settlement Plan. But Earp predicted that 50 per cent of Sema's UK operations would be in this market in a few years' time. He said the innovation lay in service level agreements (SLA's) - the core part of any outsourcing contract. "The SLA's in our business process outsourcing don't even mention IT. They cover business targets - like the number of health checks each GP does and the time schedule for transferring cash from ticket issuers to rail services. "It's our business to make sure the IT serves these goals," he said. Major UK users look set to demand just that. Edwin Wilson, head of technology at the Inland Revenue, told Silicon.com: "I'm a bit concerned that our SLA's with EDS have been static for a number of years. They need to be expressed more in business terms." The IT service manager of a major UK manufacturer agreed: "Our SLA's are currently based on IT goals, but we hope to define them by business value in future. The partnership side of things is just not happening with our outsourcer - although they are a global leader."