More than £20 million a year is being slashed from the taxpayer's bill for Service Birmingham amid a series of changes that will see 500 jobs brought back in-house.
Birmingham City Council has negotiated more than £150 million off the cost of the controversial outsourcing contract, to carry out ICT and project work, across the remaining seven years.
Among a host of changes announced by the authority this morning will see its call centre brought back in house by the end of the year, with 500 employees transferring to council employment.
The council had come under pressure to reduce the cost of the Service Birmingham contract, which is a joint venture with Capita, which has run to more than £100 million a year in recent years.
The Post previously reported that the council-funded company enjoyed a pre-tax profit of £21 million – or £58,400-a-day, with £8 million worth of dividends in a single year.
Deputy leader Ian ward said this morning that the changes would bring major savings and a greater degree of control over council communications.
Coun Ward said: "We have negotiated an agreement with Service Birmingham which provides a major step forward in reducing our cost base for ICT.
"On balance, the council considers the risk of changing ICT provider at this time too risky.
"It would take a considerable period of time to procure and would cost an additional tens of millions up front in early termination charges and re-procurement costs."
The council will bring the call centre in house by the end of the year, as part of a "One Contact" vision promising to resolve queries on the first point of contact.
The council was unable to comment on specific costs or savings before the report goes before cabinet on Monday, June 30.
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