Fonterra is shaping up to replace its Kiwi tech services provider with one of two India-based 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 that support employees when they sit down, log in, check their emails and navigate through their working day. This is part of our standard process of regularly assessing market capability for services we use within Fonterra.
My ex-employer Datacom did a good job there under the constraints. It wasn't especially people-heavy so hard to see how offshoring would deliver a better result, especially if you want innovation.— ElectricBazza 🚲 (@electricbazza) August 14, 2019
New Fonterra chief executive Miles Hurrell recently brought a chief information officer onboard - American Piers Shore.
In his former role as vice-president, 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.
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The Herald understands the contract is worth around $20m 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 an annual profit of $42 million 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 has its own software develops and products for large organisations, but also partners with big tech providers like Microsoft and Amazon.
NZ Rise co-chair Victoria MacLennan said Fonterra should look to local providers.
Her lobby group has previously complained about a "cultural cringe" that sometimes sees large organisations opt for offshore providers - even if those providers sometimes have a mixed track-record, and local options have proven results at a competitive price.
Today, MacLennan said she thought there were a number of New Zealand companies with the chops to handle Fonterra's IT needs.
She added that, more broadly, it was better for our economy, and growing our skills base, if the diary giant turned to local IT providers.
"Fonterra are in a pretty great position to enable stimulation in regional Aotearoa as well. It can create opportunities for employment in the digital sector - a high-wage future focused industry," she said.
The dairy co-operative warned it would make a massive loss for a second year in a row, and Hurrell is under pressure to turn things around.
But MacLennan doesn't see the CEO getting a better result from offshoring IT.
"New Zealand has plenty of really great companies in the digital technology space offering software and engineering capability as both product and services. 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 - as well as a supplier of products all New Zealanders consume," 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 our customer's decisions.
"We have advised that they are undertaking a review of providers and we respect that decision. We have a long-standing relationship with then and will work with them on what they need."