AWS Lands HMRC’s $629m Deal to Exit Legacy Data Centres

The UK’s primary tax authority, His Majesty’s Revenue & Customs (HMRC), has awarded a £473m (US$629m) contract to AWS to support its transition from traditional data centres to cloud-based infrastructure.

Spanning an initial ten years with provisions for extensions, the agreement accelerates HMRC’s data centre exit programme. 

HMRC’s data centre exit

The mandate requires the agency to vacate three legacy data centres currently managed by Fujitsu and fully decommission its remaining physical infrastructure by June 2028.

AWS has been tasked with providing resilient hyperscaler services capable of hosting the entirety of HMRC’s complex digital operations. 

The scope extends beyond basic hosting, offering the flexibility to accommodate future technological evolution and cover additional services such as comprehensive business service transformation, migrating non-Fujitsu data centre services, and extensive application modernisation initiatives.

The hyperscaler mandate

The procurement, officially named ‘Procurement for the provision of Hyperscaler Services to enable Data Centre Exit,’ was explicitly designed to attract bids from only the industry’s largest cloud providers.

While the initial March 2025 contract notice estimated the overall financial commitment at £500m (US$666m) including VAT, HMRC was clear that it anticipated selecting a single “hyperscaler”.

This successful bidder bears the enormous responsibility of executing the transfer of all services and infrastructure from the former Fujitsu facilities onto secure, sovereign UK-based cloud hosting. 

The technical challenge is substantial, primarily due to the deeply embedded legacy environment, which relies on an intricate mix of nearly a dozen aged operating systems, including proprietary systems like HP’s Unix, IBM’s AIX and Sun’s Solaris.

Competition and market dominance

Reporting from The Register in October indicated that, although HMRC informally shortlisted AWS, Google and IBM during the bidding phase, the actual technical specifications strongly narrowed the competitive field. 

An individual knowledgeable about the procurement suggested that the tender design effectively limited the pool of realistic winners to only AWS or Microsoft. This assertion is supported by an insider comment published in The Register:

"[It was all about] ability to execute, a proven history of working with departments like this – seven-year track record of hosting massive hyperscaler-type services. It could only be AWS or Microsoft,” said the insider to The Register.

AWS’s selection aligns with its industry standing: the company secured first place in DataCentre Magazine’s Top 100 Data Centre Companies list 2025, recognition derived from its unmatched global footprint, leadership in AI infrastructure, and dedication to energy efficiency. 

While AWS currently operates one existing UK cloud region in Bristol, the company has demonstrated expansion plans, having recently filed for a major new London data centre with Buckinghamshire Council.

Regulatory scrutiny over cloud pricing

While the hyperscaler market accelerates, it remains under intense regulatory scrutiny. 

Minister Kanishka Narayan addressed the ongoing concerns in a written question, stating that the Competition and Markets Authority (CMA)’s investigation had “identified a number of potential competition concerns with clear negative impacts for UK businesses, consumers and the public sector".

Although Narayan did not provide a current cost assessment, this follows previous CMA findings that estimated private companies and public sector entities were overpaying for cloud services by an alarming margin of approximately £500m (US$664m) annually. 

Kanishka stressed that, despite the CMA having recommended in July that its board prioritise a strategic market status investigation into cloud competition, the final decision rests with the independent authority.