British Steel computer deal for French firm

British Steel has awarded a pounds 500m contract, the biggest computer contract ever signed in the private sector, to the French IT company Cap Gemini.

The contract is to outsource British Steel's entire computer support over the next 10 years and develop a new range of IT services. It will initially involve the transfer of more than 600 British Steel IT staff to Cap Gemini. The French group is Europe's largest computer services company, employing 27,000 people including 5,500 in the UK.

The size of the deal is further evidence of a growing demand for computer experts to run essential and increasingly complex IT services. Cap Gemini's contract, which begins in March 1998, was won from EDS, the US computer services company much maligned by Private Eye.

British Steel originally gave the contract to IBM in February last year, before terminating the deal in January this year, reputedly because of IBM's concerns over margins on the contract.