Canada Post announced that its IT shared-service provider, Innovapost, will be sold off to Deloitte Canada.
As part of the agreement, Deloitte will deliver and support Canada Post’s day-to-day IT operational services.
“Today is the start of an exciting journey to transform Canada Post’s information technology model so that we can better meet the demands of our customers, particularly in the competitive parcel market,” said Doug Ettinger, president and chief executive officer, Canada Post. “This change not only enhances our strategic focus, it also ensures we have the world-class expertise in place to deliver results for Canadians.”
This transaction adds to the slew of IT contracts that private consultants like Deloitte have been gobbling up from the government, and which has been under scrutiny the last few months in the House of Commons.
Members of Parliament have, in fact, called out the beefy contracts given to system integrators like Deloitte, Accenture, IBM, PwC, and many others, while the IT systems of the government continue to suffer.
Plus, in last year’s budget, the government proposed scaling back spending on consulting, travel, and other professional services by 15 per cent of planned 2023-24 spending, which was expected to save C$7.1 billion over the next four years.
But the Canada Post shakeup also comes on the heels of years-long revenue struggles for the crown corporation. In the third quarter of 2023, the crown corporation recorded a loss before tax of C$290 million, while its cost of operations rose to C$26 million.
A detailed examination showed that Innovapost “was not providing the speed and agility needed to compete today and in the future”, Canada Post said in a release.
Last week, Canada Post also announced it was selling off its logistics division, SCI Group, to Montreal-based provider of third-party logistics services Metro Supply Chain.
Metro Supply Chain provided no details as to what would happen to the 3000 employees currently at SCI Group.
The future of employees at Innovapost is also uncertain, as Canada Post said that the “majority of the organization’s talented employees will be integrated with Deloitte.”
Innovapost’s president and CEO, Franco Chirichella, will become Canada Post’s new chief information officer (CIO) and lead a team of former Innovapost leaders who will also transition to Canada Post in the new organization, or into other roles supporting the corporation’s IT transformation.
The sale and agreements with Deloitte Canada, which followed a comprehensive, multi-stage bidder selection process, will be finalized in the coming months, subject to customary closing conditions. Canada Post spokesperson Jon Hamilton told the Globe and Mail that further details will be released in public financial statements once the sale is finalized.