Elaine McFadden
January 21, 2016

Bye-bye services: Feds look offshore

Bye-bye services: Feds look offshore

Finance Department: Set to send work to lower-cost providers offshore

The Commonwealth will start considering proposals to offshore chunks of its corporate services operations to lower-cost providers overseas in two weeks.

The Department of Finance has sought responses to a discussion paper issued in December, calling for views on the most effective way to consolidate shared services in the Federal Government – and the potential to offshore the delivery of them.

In what could be an historical change of direction for Commonwealth back-office processes, nine questions have been posed through the Whole-of-Government Shared and Common Services Programme discussion paper, ahead of the February 10 deadline. So far just two responses have been received.

The department specifically asked “which elements of service delivery, if any, could be most effectively be provided offshore and, if so, what advantages would this bring and how would the related risks best be managed.”

The discussion paper was the subject of an information session in mid-December where 72 service providers, as well as representatives from other departments and agencies attended.

The department cited the NSW Government’s Service First outsourcing arrangement with Infosys and Unisys – where functions performed offshore represent 30 per cent of jobs in relation to Service First – when questioned at the information session on whether the Department was prepared to send the delivery of the services offshore.

Officials said the Department wanted to determine where allowing any functions to be performed offshore would be beneficial.

Historically shared services at the Federal level have not been particularly successful, and clear harmonised work processes would be a key to successful implementation, according to industry expert and Ovum Public Sector Research Analyst Kevin Noonan.

“The theory of offshoring and shared services is sound, and it’s not surprising the two are being considered together,” Mr Noonan told InnovationAus.com.

“But governments around Australia have not had a happy history with shared services and that’s had nothing to do with the theory. It’s been about harmonising work practices within departments and a willingness to undertake shared services within them.

“The internal admin systems [of each department/agency] have grown up over time in different ways and so whether it works or not really depends what happens in the deep end, and how much of a facilitative role Finance takes, as opposed to driving agencies at a rate that unpractical.”

Speaking to InnovationAus.com about Infosys’ work with NSW Government, General Manager of Public Sector Allen Koehn echoed Mr Noonan’s sentiments.

“As soon as you try to force departments to do something, they will naturally say no. We have all seen whole-of-government initiatives that end up being anything but whole-of-government,” Mr Koehn told InnovationAus.com.

“[NSW Government’s Service First approach] is an example of how you can do it. It doesn’t mean that a lookalike would work for one of the consortiums [at a Federal level] but certainly can be leveraged,” he added.

A transcript of the questions and answers from the information session are available on the AusTenders website along with the full discussion paper.

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