From next February the British Steel employees will transfer to contracts with IBM, which has already signed recent outsourcing deals with several big British companies, including Thorn, Legal & General and a pounds 65m contract with Sun Alliance signed at the end of last year.
The changes will affect workers in British Steel's computer departments across the UK and will include all administrative, payroll and personnel functions and supply and purchasing information with the group's customers. They cover a variety of job grades and salaries.
Some 120 staff are affected in Port Talbot and 150 on Teeside, with others in data centres at Wednesbury in the West Midlands , Blackburn and Scunthorpe. Computer staff involved in manufacturing software roles will stay with British Steel.
In such outsourcing arrangements the workers involved will stay in the same posts in the same offices but work for the computer company. British Steel, headed by Sir Brian Moffat, declined to reveal how much money it would save as a result of the deal, or whether any of the 600 workers involved would lose their jobs. They will be covered by employment law, which means IBM must continue with previous wage and pension agreements.
A spokesman for British Steel also declined to reveal how much money the company would save as a result of its link-up with IBM. The workers affected currently use 7,000 desk-top terminals and networked systems, some of which will be updated as a result.
Earlier this year British Steel outsourced 300 staff, mostly based in Rotherham, involved in its central management services division responsible for other administrative work. The deal, worth an estimated pounds 100m, was with the computer group Cap Gemini, formerly called Hoskyns.
The new agreement with IBM is a clear success for the computer group, which had been criticised for failing to exploit outsourcing opportunities with British firms. It is thought that the US group beat off competition from Cap Gemini and EDS.
IBM has so far taken on 10,000 staff worldwide in outsourcing arrangements, including an estimated 1,000 in the UK.
The deal with British Steel does not involve IBM hardware such as personal computers. The British firm currently uses systems made by several different contractors, including ICL of the UK.