Swansea Council has recommended its cabinet not to proceed with phase two of a controversial outsourcing programme with Capgemini.
The council outsourced back-office functions and IT services in phase one of an £83m deal with the outsourcing provider.
However, phase two – creating a new call centre and website front office to give local people a single point of contact with the council – has been called off.
The outsourcing deal was signed in December 2005 after 18 months of disagreement with council IT staff, which included strike action by Unison members.
Council leader Chris Holley said that over the past year work by the council and Capgemini had shown the phase two proposals were not affordable.
“Phase one will improve the efficiency of support and back-office services and will start to show benefits for the council during 2007,” he said.
Originally, the council had predicted it would save £72m.
Martyn Hart, chairman of the National Outsourcing Association, said: “The fact that Swansea Council and Capgemini have had their fingers so badly burned through this deal is likely to be because best practice procedures were not in place from the start.
“The Swansea project is a perfect example of the necessity for organisations to properly research and formulate outsourcing projects and conduct all the correct sourcing procedures, including consultation with the staff and unions, as early as possible.”