Gershon 2.0: Services Aus cuts 1000 tech contractors

As many as 1000 technology contractors have been let go at Services Australia amid the federal government’s push to reduce its external workforce and following the end of several significant multi-year projects.

The contractors, which represent a significant portion of the services agency’s external workforce, will depart over the coming weeks, with the bulk expected to lose their roles in the lead up to Christmas, understands.

Services Australia employed 2266 Australian Public Services (APS) staff and 2444 non-APS employees in its dedicated technology services group at the end of December 2020, when the agency last provided a breakdown of the workforce.

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A spokesperson told that “up to 1000 ICT contractors are ceasing over the next few weeks” after “a number of commercial ICT contracts recently reached the end of their requirements”.

Contracts with IT services and consulting firms Modis, SAP and Accenture, worth a combined $4.55 million between July 2021 and June 2023, were cited by the agency, but the scale of the cuts suggest other contracts have also come to an end.

The spokesperson said the contracts supported the “response to the COVID pandemic and the delivery of projects”, including the Welfare Payment Infrastructure Transformation (WPIT) and the Residential Aged Care Funding Reform.

The WPIT program, a seven-year overhaul of the ICT systems underpinning Centrelink, officially ended at the end of June, but work on one of two major elements – the Entitlement Calculation Engine (ECE) – was set to continue until at least September.

It is unclear whether the ECE engine – the build of which has been contracted to Infosys – has been completed or whether its completion triggered the job losses. Services Australia has been contacted for additional comment.

“The contractors impacted by this change have provided specialised expertise and advice through a challenging few years,” the spokesperson added.

“They’ve supported us to significantly bolster our ICT systems to meet unprecedented demand on our systems and services during emergencies such as the pandemic, and we thank them for their work.

“These contractors are highly skilled professionals, working in a high demand field in the current tight employment market.”

Last year, Services Australia revealed plans to reduce its reliance on contracts and increase the number of APS staff in its technology service group. The agency has set a target of having 70/30 blend between APS staff and contractors by June 2025.

The move followed criticism from the Community and Public Sector Union that the agency had “lost sight of the benefits of in-house IT”, in part due to the average staffing level (ASL) cap, which the new government has pledged to abolish.

The government came to power with a mandate to cut overall spending on contractors and consultants across the APS by at least $3 billion over four years and has also recently revealed plans for an in-house consulting unit to provide professional services.

Services Australia is now “offering support” to impacted contractors, including by “reach[ing] out to other APS agencies who may be in a position to offer new opportunities”. Some of the contractors have reportedly described the cuts as being Gershon-esque.

The 2008 Gershon review, which the then-Rudd government committed to in full, recommended the number of ICT contractors be cut by as much as 50 per cent at agencies to make savings and fund in-house roles.

Do you know more? Contact James Riley via Email.

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