The Department for Work and Pensions has formally signed a desktop infrastructure deal with Fujitsu, worth up to £330 million over six years.

The deal, billed as the UK’s largest desktop and thin client outsourcing arrangement, will see the supplier replace HP-EDS.

It will “significantly reduce” the running costs of the DWP’s 140,000 PCs in 1,000 locations, the department said. Analysts today told CIO sister title Computerworld UK that the new contract potentially cuts millions of pounds from annual costs.

Money would be saved by adopting thin client technology, which the supplier described as “more efficient and flexible” than the existing standard desktop setup. Technology will also be supplied by Fujitsu Siemens Computers, a joint venture between the German and Japanese firms, as well as EMC, Citrix, Microsoft and Appsense.

The systems are aimed at cutting support and hardware costs, improving availability and productivity, and slashing electricity consumption. The DWP expects to save “tens of millions of pounds” in energy savings alone.

Work will transfer in phases to Fujitsu, which will fully take over on 1 September, and is expected to be accompanied by a number of HP-EDS staff transferring to the Japanese supplier. But challenges await Fujitsu after hundreds of DWP IT contractors last month went on strike, in an angry fight over pay and redundancies at HP.

Losing the work is seen as a blow to HP, which took pride in the deal and had helped create £1.5 billion in savings for the DWP over five years. But HP retains other services with the department, including application hosting, and according to analysts TechMarketView HP remains the largest IT services and software provider in the UK, by revenue.

Other work still to be awarded by the  CIO 100 ranked DWP includes application maintenance and integration services. All the contracts, addressing £3 billion worth of current deals, will be awarded over the next five years.

Joe Harley, (pictured) chief information officer at the DWP, said the Fujitsu desktop deal “sets the tone” for future contract awards “by delivering significant benefits for the department, and as a framework for government wide IT”.