The Inland Revenue has announced the shortlist of bidders for its £4bn IT outsourcing contract currently held by EDS and Accenture.

The choices are BT's services division, Cap Gemini Ernst & Young, and an EDS/Accenture consortium. The Revenue estimates that the contract will be worth up to £400m a year for an initial 10 years.

The original EDS deal was signed in 1994 and expires in 2004, but the scale of the outsourcing contract has prompted the Revenue to start the competition early.

The deal will cover 73,000 desktops, 200 systems, 20 ICL mainframes and 177 IBM and Hewlett Packard Unix boxes. Another contract currently held by Accenture is also part of the deal.

Criticism had been levelled at the Revenue that the cost of bidding for the contract would put suitors off, and that it would be likely to stay with EDS.

Short-listed bidders are "expected" to be invited to tender, with the winning bidder to be announced in December 2003.