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September 7, 2023

HMRC picks Kyndryl for £4.4m mainframe and cloud contract

The ITSP will support the government's tax office as it looks to digitise its operation.

By Matthew Gooding

Kyndryl has secured a contract worth £4.4m with HM Revenue and Customs (HMRC), which will see the IT services provider help the government department prepare for its cloud migration while continuing to manage existing mainframe infrastructure.

HMRC has handed a £4.4m digital transformation contract to Kyndryl. (Photo by Peter Dazeley/Getty Images)

The 15-month partnership, which will run to the end of September next year and has been agreed through the government’s G-Cloud buying framework, will build on an existing agreement between the organisations. Kyndryl says it will help HMRC accelerate its “journey to more agile and flexible operations in a modern IT architecture.”

How Kyndryl’s partnership with HMRC will work

HMRC is in the midst of a digital transformation, and Kyndryl Consultant, the ITSP’s consulting arm, will work with partners Microsoft and the Advanced Computer Software Group’s Application Modernisation Practice to develop modernisation options for powering HMRC’s operations into the coming decades.

As well as supporting HMRC’s journey to the cloud, Kyndryl’s enterprise and zCloud practice will continue to aid the running of existing mainframe infrastructure as the department seeks to find efficient and low-risk routes to migrate applications and eliminate technical debt.

Kyndryl, which was formed in 2021 when IBM spun off its legacy IT infrastructure business, has a long history of working with public sector clients as part of Big Blue.

John Chambers, Kyndryl’s president for the UK and Ireland, said: “Kyndryl is thrilled to sign its first direct contract with HMRC to support HMRC’s strategic aims of administering tax systems in the simplest, most customer-centric and efficient way. The agreement underpins our continued commitment and focus to support the UK’s public sector and to drive better outcomes for UK citizens.”

HMRC continues its digital transformation

The shift to cloud is part of a wider transformation effort at HMRC. The UK’s tax office released its latest IT strategy in July, in which it put a focus on “scalable digital platforms” to enable it to provide more tax services online and make life easier for end users and staff.

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The department plans to provide the technical capability to let customers access HMRC products and services they need by reorganising internally. “We recognise that technology can be a key enabler and accelerator for customer outcomes; however, making effective use of technology can be hard,” the strategy says.

To that end, HMRC has been spending money to grow its digital workforce. Figures obtained under the Freedom of Information Act by think tank Parliament Street earlier this year showed that the agency spent £150m on more than 4,000 full-time tech staff in 2022, as well as launching 15 new academies to train employees in cloud computing, data science and other disciplines required to enable the digital push.

But progress has not all been smooth, and in June a National Audit Office criticised the pace of the department’s flagship Making Tax Digital programme, which will enable businesses to keep records and file returns online. The NAO said the timetable for the programme, which is currently in pilot ahead of a full launch in 2026/27, had been optimistic. Speaking to parliament’s public accounts committee at a hearing following the report’s publication, HMRC executives said legacy IT systems had hindered the project.

Read more: Will government back down over Online Safety Bill encryption row?

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