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By Andy McCue, 12 November 2004 16:15

NEWS Vertex, the business process outsourcing (BPO) arm of United Utilities, has won a landmark £427m public sector deal with Thurrock Council.

The 15-year outsourcing contract will see Vertex manage a range of council services from administration and customer services to revenues, procurement and HR.

A key component of the contract is a £10m IT transformation programme, which the council says will underpin its modernisation agenda and overhaul of service provision.

Vertex beat off competition from Capita and Liberata for the deal, which represents the biggest public sector BPO contract to date.

The contract starts from 1 April next year, when around 600 council employees will transfer to Vertex and a new customer call centre will be created in the town offering a range of council services.

Thurrock council MD David White said in a statement: "While this is an historic opportunity to transform how services are delivered in Thurrock, it is also an exciting time for the staff who will transfer to Vertex as part of the new arrangements." He also said that the deal has been designed specifically to deal with the council's modernisation agenda.

John Willmott, MD at BPO analyst Nelson Hall, said the size and scope of the deal could well kick-start a flurry of BPO activity in the public sector.

"What we have found over the last 12 months is that BPO has been very quiet in the public sector," he said.

Willmott said the recent Treasury-sponsored Gershon Review, which identified areas for public sector cost-savings could kick-start government BPO deals.

Vertex also has a significant offshore presence in India but Willmott said it is would likely be at least five years, if at all, before there would be any offshore components to a sensitive public sector deal like this.

"Currently in the short term there is a huge amount of work to do on-site with the existing people and that is going to take years," he said.

Separately United Utilities has also announced it has bought out Capgemini's stake in Vertex for £47.5m in cash. The utility firm now owns 100 per cent of Vertex and Capgemini no longer has any representation on the Vertex board.

Vertex originally teamed up with Capgemini in February 2001 when it was mainly an in-house service provider to United Utilities. That deal saw Vertex take on Capgemini's BPO business and Vertex outsource its IT work to Capgemini. Contracts Vertex is involved in include Westminster City council and Hydro-One.