Royal Mail has signed a £1.5bn contract to outsource computer work to private companies in a move aimed at saving £250m over the next ten years.

More than 1,700 Royal Mail information technology staff will transfer to Computer Sciences Corporation (CSC), BT and Xansa, which will be responsible for running data centres, desktop computers and hundreds of business application systems.

Adam Crozier, Royal Mail's chief executive, said: "This is a great deal for Royal Mail and a great deal for our people."

Mr Crozier said that the CSC-led so-called Prism Alliance was a powerful combination of three world class companies.

"In one leap we will have access to the levels of advanced technology we need to compete successfully and improve our services to customers."

Mr Crozier said the Royal Mail had worked hard to ensure workers were taken care of when they transfer to CSC, which will take on 1,470 ex-Royal Mail employees, Xansa will take 220 and BT, 45.