With an expected budget deficit of $533m in 2006-07, the Iemma government is planning to reduce the number of government jobs by up to 5,000, amalgamate 14 agencies into 2 departments and look for savings in “back office” staff, according to recent press reports.
Treasurer Michael Costa has indicated that savings are expected from information technology functions.
NSW government has sought similar savings in the past from shared services arrangements for finance, human resources, information technology and office support. However, a report by the NSW Auditor-General in November 2004 indicated that benefits had been slow to realise.
The NSW government is unlikely to find the ICT savings it wants without a more comprehensive consideration of outsourcing.
Other Australian governments, both Federal and State, have extensive experience of ICT outsourcing as an approach to containing back office and IT support costs. The federal government currently has at least 22 agencies with either comprehensive or partial outsourcing arrangements in place.
The Northern Territory government recently announced the selection of Fujitsu as preferred tenderer for their four-year, $150 million desktop and helpdesk service contract, while the South Australian government is yet to announce the successful bidders on its tenders for the refresh of its whole-of-government outsourcing.
The NSW government has been slow to adopt outsourcing. An Intermedium search of the NSW government eTenders website found only one contract and a current select tender for ICT outsourcing.
The NSW Department of Education and Training entered into a 3 year contract with IBM GSA in July 2004 for “outsourced computer facilities management services”. The contract was valued at an estimated $1.8m per year.
RailCorp has reported an expression of interest for selected suppliers closing on 1 March for ICT outsourcing. Tender documents are available only to invited suppliers.
The long mooted restructure of NSW Commerce’s State Procurement division has quietly been put in place. The NSW government directory lists Tony Solarno as Group General Manager, State Procurement, a role he had been acting in since Vincent Nair’s departure last July. Anthony Lee is listed as General Manager, Client Services, Garry Murphy as General Manager, Government Contracts and Harry Banga as General Manager, Strategic Sourcing. As yet there is no information on the Commerce site about the responsibilities of these new structural units.
However, it is hard to imagine in the macro-government context just described, that managed services or outsourcing arrangements would not be under consideration as part of the strategic sourcing business model.