National Savings to extend Siemens contract

National Savings and Investments (NS&I) looks set to extend its outsourcing contract with Siemens Business Services for a further five years.

NS&I has agreed in principle to extend its Public Finance Iinitiative deal with Siemens until 2004, at a cost of around £400m.

The pair originally agreed a 10-year contract for business process outsourcing in 1999.

Today's announcement marks the halfway point of the contract, at which time an option to extend to a total of 15 years came into effect.

According to a National Audit Office report issued last year, the deal "has significantly improved productivity and reduced costs".

But the report also noted that Siemens "encountered a number of problems when it began to transfer NS&I products from legacy systems to a new IT platform".

"The partnership appeared to be good value for money, but it remained a high risk project for Siemens and NS&I," the report concluded.

Alan Cook, NS&I chief executive, said in a statement: "The partnership with Siemens is helping us improve what we are able to offer customers."

As part of the contract extension it is proposed that a number of routine jobs be outsourced to India. NS&I has promised that no jobs will be lost and SBS is to consult with trade unions.