Fonterra ditching NZ tech provider: Insider

Fonterra is shaping up to replace its Kiwi tech services provider with one of two Indiabased outsourcers, an industry insider tells the Herald.

The dairy co-operative has been using NZ’s Datacom and the multinational DXC for information technology services.

Both have been “shown the door”, the source says.

Instead, Fonterra has settled on two India-based offshoring specialists as the finalists for a new “all-of-IT” outsourcing contract: Tata Consulting Services and HCL (Hindustan Computers Limited).

“I am sure their shareholders will be very impressed that this move will take even more jobs from the NZ IT sector,” the source says. “It makes the loyal-looking NZ advertising currently on TV look really hypocritical.”

A Fonterra spokeswoman would not name any of the companies involved in the tender.

She said, “We are engaging with a number of vendors that could provide us IT infrastructure services. This is part of our standard process of regularly assessing market capability for services we use within Fonterra”.

New Fonterra chief executive Miles Hurrell recently brought a chief information officer onboard — American Piers Shore.

In his former role as vicepresident, IT for Eli Lilly, Shore signed up the pharmaceutical giant with HCL.

At this point in the process, “no decisions have been made” about whether to drop incumbent providers, she said.

The Herald understands the contract is worth around $20 million per year.

Datacom is New Zealand’s largest home-grown technology company.

It has 5500 staff across New Zealand, Australia and the rest of the world, and recently announced annual profit of $42m on revenue that rose 17 per cent to $1.29 billion — in part due to major new business in the US.

Its major investors are Wellington’s Holdsworth family and the NZ Super Fund.

It maintains cloud computing data centres and develops products for large organisations, but also partners with tech giants like Microsoft and Amazon.

NZ Rise co-chair Victoria MacLennan said Fonterra should look to local providers.

MacLennan said she thought there were a number of New Zealand companies with the chops to handle Fonterra’s IT needs.

“New Zealand has plenty of really great companies in the digital technology space. All of these companies are producing fantastic mahi and would do an amazing job for any of New Zealand’s large companies,” she said.

And she also wants Hurrell to have a broader vision as the head of one of our most iconic businesses.

“Fonterra is one of NZ’s largest companies,” MacLennan said. “NZ Rise thinks it has a responsibility to hold a strong role as a purchaser and supporter of New Zealand-owned businesses across the board.”

A spokesman for Datacom said, “It isn’t our policy to talk about [customer’s] decisions.

“We have advised that they are undertaking a review of providers and we respect that decision.”