Cap Gemini Ernst & Young (CGEY) has locked in another Canadian power company in a lucrative outsourcing agreement.
Hydro One Networks has reached a 10-year, $1 billion outsourcing agreement with CGEY which will see the creation
of a new company, Inergi LP. In November, CGEY jointly created a company with Ontario Power Generation called New Horizon System Services in an outsourcing agreement also worth $1 billion over 10 years.
Hydro One Networks Inc., which owns and operates a transmission and distribution system in Ontario, will now focus on its core business — the delivery of electricity to Canadian consumers across high voltage networks, said Hydro One spokesperson Terry Young.
The CGEY deal will see approximately 900 Hydro One Networks employees shift over to the new company, effective March 1. “”The people that we have that are currently doing this work in-house (are) being transferred to Inergi. . . . They will essentially provide the same service that they do in-house, only they will do it from a service provider role,”” said Young.
Those services will include enterprise technology services, payroll, supply chain and accounting services. Customer service operations will be handled by Vertex Customer Management (Canada) Ltd. under subcontract from Inergi.
The timing of the outsourcing agreement has nothing to do with the recent deregulation of the energy business, said Young, since Hydro One began talking to CGEY back in October of last year. But the deregulation of Ontario could mean the appearance of more energy outsourcing agreements, said Jason Bremner, senior analyst of outsourcing services for IDC Canada Ltd.
New Horizon System Services, for example, now has three outsourcing agreements under its belt. Most recently, it signed a six-year deal with Bruce Power, which runs nuclear power stations in the Lake Huron area.
“”If you’re going through a deregulation process — because of the constant change you’d be facing — relying on an outsource provider is a sensible way of doing it, because you don’t have to lock up capital in infrastructure,”” said Bremner. New Horizon System Services and likewise Inergi could also pursue IT outsourcing agreements with other parts of Canada and the United States that are undergoing deregulation, he added.
Hydro One Networks is a subsidiary of Hydro One Inc., but the parent company has no plans to outsource the remainder of its IT operations, according to Young. Hydro One’s other holdings include Hydro One Telecom, Hydro One Remote Communities and Hydro One Brampton. Most are too small to necessitate moving their operations outside, he said.