HMRC cost cutting includes plans to offshore

HMRC is considering the Indian offshoring market for the first time

HM Revenue & Customs (HMRC) has published its business plan (PDF) for the next year, which it hopes will help save the department around £660m by 2017.

From a technology perspective, HMRC plans to renegotiate IT agreements with partners, instigate a more resilient IT infrastructure and improve data security practices.

The need for improvements in data security has been high on the department's agenda since the reputation of its data handling policies was tarnished after a series of large-scale data losses.

HMRC hopes the plan will achieve cost savings of £110m year on year from 2011 until 2017.

HMRC has also announced a plan to start offshoring IT work to India, which is a first for the department and breaks the traditional public sector mould of restricting outsourcing partnerships to UK-based companies.

The offshoring plans have not been included in the 36-page business plan. A spokesman announced the news separately, explaining that the change is part of a new pilot arranged by HMRC's long-term partner Capgemini.

"We have never done offshoring before and it is not pre-empting what this could lead to, but we are the third highest spending department in Whitehall so we need to look at the opportunities available to us," he said.

The spokesman explained that the offshoring work relates to HMRC's ship tracking system and will not involve taxpayer data going offshore, and claimed that buying services offshore had reduced what would have been a £61m contract with Capgemini to £56m.