Why did taxman really dump BT outsourcing alliance?

CSC's talks to buy Schlumberger's European IT services arm may have influenced the Inland Revenue's decision to dump the BT-led Fusion Alliance from the bidding for its £4bn outsourcing contract, according to a leading IT services industry expert.

CSC is strongly rumoured to be in advanced talks with energy and oilfield services company Schlumberger to buy Sema just two years after the French firm bought it for $5.2bn.

But CSC, along with SchlumbergerSema, was part of the Fusion Alliance that was surprisingly dropped from the Revenue's Aspire IT competition last week. Richard Holway, veteran industry watcher and director at analyst group Ovum Holway, said uncertainty created by the talks may well have played a part in the Revenue's decision.

He told silicon.com: "Up until two weeks ago I would have given good odds on it being EDS and Fusion Alliance in the last two. Everyone seems to agree that something went wrong in the very last stages. That was about the time when the rumours went into overdrive about SchlumbergerSema. If you can get any better reason why Fusion Alliance wasn't even shortlisted but Cap Gemini Ernst & Young was I'd like to hear it."

Analysts were surprised that Cap Gemini and Fujitsu were chosen ahead of the BT Alliance because of their lack of experience with public sector contracts of this size.

The sale of SchlumbergerSema has looked likely since the Schlumberger announced it was focusing its IT operations purely on its core energy market in December last year.

Although analysts at the time did not see Sema as a logical fit for Schlumberger's core business, the unit has gone on to win many high-profile public sector contracts at the Department of Work and Pensions and the Metropolitan Police. It is also in the bidding for contracts included in the £2.3bn NHS IT modernisation programme.

Both SchlumbergerSema and CSC refused to comment on the speculation when contacted by silicon.com and any announcement is unlikely before Schlumberger releases its quarterly earnings report to the New York Stock Exchange tomorrow.