Energy sector’s outsource spree goes on with EDF / Capgemini deal

In the latest in a string of large outsourcing deals by energy companies, the UK division of French utilities company EDF has announced a £100 million IT support deal with IT services supplier Capgemini.

Under the contract, Capgemini will provide IT support and desktop services to 15,000 EDF users. The contract is guaranteed for three years, with an option to extend it by a further two.

The work is a new contract win for Capgemini, which replaces EDF’s existing supplier Computacenter. But Capgemini has worked with EDF for a decade on other systems including CRM applications, e-procurement tools and the software it uses to monitor and maintain its nuclear generation facilities.

A number of European energy suppliers have announced large outsourcing deals recently. Earlier this week, British Gas’ parent company Centrica signed a £250 million deal with Hewlett-Packard, which has also won big contracts from E.ON and BP.

Last month, Dutch oil giant Shell entered into a €300 million contract with Logica, which will operate its fuel card loyalty scheme for businesses.

So why is the energy sector rushing to outsource? It is not for want of profit, which doubled for both Centrica and Shell in 2010.

A spokesperson for Centrica told Information Age earlier this week that its deal with HP had been motivated in part by the uncertainty facing the company and the industry. It had selected to procure utility computing services and a private cloud environment from the IT giant to allow it to scale resources according to fluctuating demand.

Besides the continued economic uncertainty facing all businesses, the energy sector has also yet to see the long term impact of world government’s energy efficiency initiatives. IT outsourcing is one way to mitigate the risk associated with that ambiguity, by sharing the burden of IT investment with a third party.

"The energy world is facing unprecedented uncertainty", said Nobuo Tanaka, executive director of the International Energy Agency at an event in London in November 2010.

"It is hard to overstate the growing importance of China in global energy," he added. "How the country responds to the threats to global energy security and climate posed by rising fossil fuel use will have far reaching consequences for the rest of the world."

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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