Outsourcing deal for Hoskyns

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The Independent Online

Cap Gemini Sogeti, the computer services company that trades as Hoskyns in the UK, is to acquire Central Management Services from British Steel in a move that demonstrates British companies' growing enthusiasm for outsourcing operations they do not regard as core to their business.

The deal involves Hoskyns taking over the assets and goodwill of CMS, including its Rotherham headquarters and more than 300 staff, coupled with a series of contracts worth pounds 125m over an initial five-year period under which the computer company will provide IT outsourcing and project services back to British Steel.

Coming on the same day as Andersen Consulting's pounds 344.5m, 10-year deal to provide IT and finance services to the stores group Sears, it is evidence that the outsourcing trend is unstoppable, said independent computer industry analyst Richard Holway.

He is predicting this area of the computer business will in the next 12 months at least equal last year's estimated growth rate of 40 per cent. "I can see absolutely no evidence of this growth peaking at all," he added. The trend is being fuelled by the belief that giving specialists responsibility for ancillary parts of their businesses will give companies competitive advantage.

Andersen and Hoskyns are two of a growing number of service companies that are helping make this area the fastest-growing part of the UK computer market. Many of the big players are US-based, such as the General Motors subsidiary EDS, which has won a pounds 1bn-plus contract to run the Inland Revenue's computer systems, and its main rival, Computer Sciences Corp, which has agreed deals with British Aerospace and Lucas.

Andersen specialises in supplying accounting services to international oil companies, such as BP, Dupont's Conoco subsidiary, Sun Oil and Asco.

However, European organisations, including Cap Gemini Sogeti, the Anglo- French Sema Group and Capita, which was recently awarded the contract to develop the driving test, are also prospering. Two UK accounting firms - KPMG, which took over National Power's tax department in 1992, and Price Waterhouse - have set up units offering clients efficiency studies of their tax functions.

Mr Holway believes that the range of services being taken on by all these players means that they will become more powerful in the IT market than service providers such as Microsoft.