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.
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