Key facts
- HMRC has saved £1 million annually by overhauling its contractor model for digital services.
- The tax authority replaced over 100 contractors with a service-based model supporting eight critical Borders and Trade digital services.
- The transition was completed in three weeks without disrupting live services.
- Operating costs were reduced by 18%, generating the £1m annual savings.
- Onboarding times decreased by 86%, and critical knowledge is now retained within HMRC.
HM Revenue & Customs (HMRC) has achieved annual savings of £1 million by transitioning away from a decades-old outsourcing model for its digital services. The tax authority partnered with British technology firm Tecknuovo to replace over 100 external contractors with a service-based model supporting eight critical digital services used for the movement of goods into and out of the UK.
The overhaul, completed in three weeks without disrupting live services, resulted in an 18% reduction in operating costs and generated the £1m in annual savings. Onboarding times for these services also fell by 86%, ensuring critical knowledge is now retained within HMRC rather than with individual contractors.
This initiative aligns with broader government pressure to find efficiency savings, with Labour targeting £14 billion across Whitehall. Experts warn that departments risk missing such targets if they remain dependent on external suppliers for digital expertise, rather than building and retaining internal capability. Tecknuovo's approach, termed 'zero dependency,' emphasizes transferring skills and ownership as part of contracts.
Ministers have promoted AI as a way to improve public services and cut costs, but experts caution that without internal capability and foundational data, AI adoption could create new dependencies. The principle of building internal capacity applies to all emerging technologies, not just AI.