London Metropolitan University has abandoned plans to outsource its back office and campus management functions to a private sector partner, a move that was designed to cut costs by 50 per cent.

The decision follows the UK Border Agency’s revocation of LMU’s "Highly Trusted Sponsor" status - its licence to offer visas - earlier in the summer, which led to half the university's international students switching to other institutions.

The axing of the Highly Trusted Sponsor status was done by the UK Border Agency as part of a clampdown on suspected bogus students across the university sector, after it was accussed of failing to act on warnings about the issue.

Although LMU is appealing the Border Agency decision, industry analyst TechMarketView said the procurement U-turn was the right one. "Given the dramatic change in its business LMU’s decision not to continue with the major 'shared services' procurement, which was near completion, appears sensible," said TechMarketView analyst Tola Sargeant.

She said, "That won’t make it any easier a pill to swallow for the three shortlisted suppliers - Wipro, BT Global Services and Capita - that had invested time and money in what could have been a ground-breaking deal."

Instead of the outsourcing contract, the university says it is embarking upon an “extensive and rapid business process re-engineering exercise focused on support service areas”.

TechMarketView said that’s likely to mean a different procurement and a smaller, shorter contract. The analyst said it understood LMU expected to have a new partner in place by the end of the year.