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Gov IT contractors hire staff in India to work on benefits system

But we're not moving existing UK jobs, these are new ones

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Hundreds of computer technicians in India are being hired to help develop an IT system for the government's universal credit welfare programme, work potentially worth hundreds of millions of pounds, despite promises that large data projects would remain in the UK.

Workers in Bangalore and Mumbai are being hired by the outsourcing firms Accenture and IBM to help design and maintain a delivery system for universal credit, internal documents show. The Department for Work and Pensions (DWP) signed contracts with the two firms reported to be worth £525m each in December.

The disclosure appears to contradict assurances from the employment minister, Chris Grayling, who told Parliament in November that he would not allow his department's major IT projects to go abroad.

Union leaders and MPs reacted angrily to the disclosure. Mark Serwotka, leader of the PCS union, said: "With unemployment high and still rising, ministers should be taking every opportunity to create skilled jobs, yet it appears plans are already well advanced to offshore the development of what is supposedly their flagship benefits system.

"This not only raises questions about the government's commitment to getting our economy moving again, but also about the pledge the employment minister made to Parliament."

John McDonnell, the Labour MP for Hayes and Harlington, said the development raised difficult questions about the security of data. "This flies in the face of firm government undertakings that databases holding the personal information of our citizens would not be put at risk by offshoring," he said. "By allowing private companies to maximise their profits in this way risks large-scale fraud, undermining the credibility of the whole system."

Mary Glindon, Labour MP for North Tyneside, said: "We're crying out for specialist jobs like these in the north-east and nationwide. We need to keep the pressure on the minister to honour his commitments on offshoring."

Universal credit, drawn up by the work secretary, Iain Duncan Smith, is due to be introduced next year. The government says it aims to simplify benefits by merging income-related jobseeker's allowance, housing benefit, child tax credit, working tax credit, income support and income-related employment support allowance into a single payment.

The IT system aims to be the first major government service to be digital "by default", and is supposed to include voice recognition technology.

According to information published this month on the DWP intranet, Paul Macpherson from Universal Credit Design Technology will employ 500 IT specialists from the UK and India. "Delivery centres" are being established in Mumbai and Bangalore and three DWP officials have conducted visits to both sites.

Macpherson wrote: "I truly believe we have an offshore capability which provides world-class expertise and we are leveraging the best resources Accenture and IBM, in particular, have to offer."

He said using Indian labour would keep costs down and allow for work around the clock. "We are looking to maximise the use of offshore development in the interests of both cost and time. In relation to cost, the greater the amount of development work we can do offshore, the lower the overall blended rate for the programme. Another benefit of offshore where time is concerned is that we are able to drive more design and development hours from each working day."

Successive governments have been heavily criticised for introducing IT systems that have failed. The NHS database has been the subject of a series of damning official reports. Last year, the Commons public accounts committee described the programme as "unworkable", and the National Audit Office criticised it for being poor value for money, patchy and long overdue.

Two weeks ago, it emerged that ministers had agreed to give Computer Sciences Corporation, the US company responsible for the NHS database, almost £1bn in health contracts.

Last week The Observer disclosed that the government had secretly agreed that the personal data of 43 million drivers in the UK could be contracted offshore to India. Data from the Driver and Vehicle Licensing Agency, including addresses and registration plate numbers, along with credit card details, will now be accessible to staff outside the UK.

In November, Grayling called for the government to stop large contracts being moved abroad, after Hewlett-Packard abandoned plans to employ people in India. It was the first time a government contractor had proposed sending the live records of so many people overseas.

He told MPs: "It is important that we do not see government-controlled employment move offshore. We have a job to try to maximise employment in this country, and I pay tribute to all those involved in that workforce for drawing our attention to the issue and the challenge. It is by far the best option to see people investing in the UK."

Asked whether the universal credit plans contradicted Grayling's words, a DWP spokesman said the jobs in India were new and therefore very different to previous plans to offshore Hewlett-Packard jobs.

"No existing British jobs are being sent overseas by the DWP and no personal data is held or can be accessed outside the UK," he said.

The spokesman declined to say how much money was being spent hiring staff in India for the project, but said officials were examining how jobs previously offshored could be moved back to the UK in future.

"Ministers have already intervened to stop government-controlled jobs being sent abroad and they are determined to continue encouraging companies to invest in the UK to create jobs," he said.

This article was originally published at Guardian Government Computing.

Guardian Government Computing is a business division of Guardian Professional, and covers the latest news and analysis of public sector technology. For updates on public sector IT, join the Government Computing Network here.

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