Exclusive Asda is transferring more than 100 internal IT workers to Indian outsourcing company TCS as it labors to meet deadlines to move away from IT systems supported by previous owner, Walmart, by the end of the year.
According to documents seen by The Register, a collective consultation for a staff transfer under TUPE – an arrangement by which employment rights are protected under UK law – begins today (June 17).
The UK’s third-largest supermarket expects affected staff to meet line managers from June 24, while the transfer date is set for September 16. Contractors will be let go at the end of their current contracts.
Asda employs around 5,000 staff in its UK offices. Between 130 and 135 members of the IT team have entered the collective consultation to move to TCS.
An Asda spokesperson told The Reg: “We are building world-class systems in a once in a generation IT transformation – Project Future – to separate Asda from Walmart’s legacy systems. Project Future will deliver a step-change in our data capabilities, our customer experience, and competitive edge. Put simply, it is a key building block of our strategy that will set Asda up for long-term success.
“As part of this process, we have taken the difficult decision to propose some changes to our technology function to ensure we have the necessary skills and capabilities in place to support these new systems. We have opened a collective consultation with colleagues impacted by this proposed change and will do all we can to support them during this process that they may find unsettling. We are fully on track to complete the three-year Project Future program by the end of this year.”
It will be up to affected staff whether they accept the offer of employment with TCS or opt for a redundancy package from Asda.
The move came as private equity company TDR Capital gained majority ownership of the supermarket group. It was acquired from Walmart by the brothers Mohsin and Zuber Issa and TDR Capital in February 2021 at a value of £6.8 billion. The US retail giant retained “an equity investment.”
Project Future is a massive shift in the retailer’s IT function. It is upgrading a legacy ERP system from SAP ECC – run on-prem by Walmart – to the latest SAP S/4HANA in the Microsoft Azure cloud, changing the application software, infrastructure, and business processes at the same time. Other applications are also set to move to Azure, including ecommerce and store systems, while Asda is creating an IT security team for the first time – the work had previously been carried out by its US owner.
Asda signed up to SAP’s “RISE” program in a deal to lift, shift, and transform its ERP system – a vital plank in the German vendor’s strategy to get customers to the cloud – in December 2021. But the project has already been beset by delays.
The UK retailer had signed a three-year deal with Walmart in February 2021 to continue to support its existing system, but was forced to renegotiate to extend the arrangement, saying it planned to move away from the legacy systems before the end of 2024.
Although one insider told El Reg that deadline was “totally unachievable,” the Walmart deal extends to September 2025, giving the UK retailer room to accommodate further delays without renegotiating the contract.
An email seen by The Register suggests a downbeat mood in the IT team, with some managers expressing disappointment and saying the team did not deserve its fate. It suggested Asda’s management had yet to understand the magnitude of task it has taken on in the IT transformation.
Asda has yet to migrate a single store to the new infrastructure. The first – Yorkshire’s Otley – is set to go live by the end of June.
One insider pointed out that project managers were trying to book resources from the infrastructure team for later this year and into the next, but, as they were set to transfer to TCS, the infrastructure team did not know who would be doing the work or what resources would be available.
“They have a thousand stores to migrate and they’re going to be doing that with an infrastructure team who have their eyes on the door. They’ll be very professional, but they’re not going above and beyond and doing on-call they don’t have to do,” the insider said. ®