Mobile operator O2 is embarking on a process to potentially outsource its technology function, a development that could affect 450 staff.

The company is in the early stages of the process but it is expected a preferred bidder will be selected by early autumn. Staff who will be affected by the decision were briefed about the process at an event in Croke Park yesterday afternoon.

Originally part of Denis O'Brien's Esat Telecom, O2 Ireland was acquired in January 2006 by Spain's Telefónica.

A spokesman confirmed that the company was embarking on an examination of outsourcing.

"Following a strategic review of the business, O2 Ireland has decided to explore the possibility of outsourcing its technology function and will soon issue a [request for proposal] to a number of potential suppliers," he said.

It is understood that Ericsson, Nokia, Accenture, IBM and Fujitsu are the shortlisted suppliers.

The suppliers were contacted in the last week and O2 management is reportedly keen that the winning bidder should already have significant operations in Ireland.

Given that the contract would involve maintaining O2's network and also managing and developing its internal IT systems, it is likely that two of these companies will partner on the deal.

Ericsson and Nokia are currently the two main suppliers of network hardware and software to O2.

The mobile operator's spokesman said: "Should O2 go ahead with outsourcing, all roles concerned would transfer to the selected partner in line with Tupe [Transfer of Undertakings, Protection of Employment Regulations] legislation."

However, sources in the company said affected staff were concerned about the impact the move could have on their career paths.

They are also reportedly concerned that redundancy packages following the transfer may not be as generous as those offered by O2. Last March the firm announced it was seeking 100 redundancies and those who voluntarily left the company received an attractive financial package.

O2 Ireland was last year recognised as one of the best firms to work for in Ireland.

It is understood that chief executive Danuta Gray is overseeing the process personally. If it goes ahead, the Irish experience could act as a template for other companies in the Telefónica group.

Outsourcing of technology by telecoms companies is a growing trend. Last year Vodafone outstourced all its application development and maintenance services to EDS and IBM.