The Australian Government has reduced its total ICT contractor workforce by approximately 530 Full-Time Equivalent (FTE) personnel, or 17 per cent since the 2007-08 financial year, according to figures included in the annual ICT Expenditure Report released by the Australian Government Information Management Office (AGIMO).
The drop can be attributed to a drive to cut ICT contractor numbers that was initiated by Sir Peter Gershon in his 2008 review of the Government’s Use of ICT.
According to Gershon’s analysis, there were 3,135 ICT contractors working in the Federal Government at the time of its publication in 2007-08. The latest ICT benchmarking shows there are now 2,605 external employee (primarily contractors) filling ICT roles for the Government, or 20 per cent of the total 13,024 FTE ICT staff employed by the Commonwealth as of 30 June 2011.
While the 17 per cent drop is well short of the 50 per cent reduction across the Australian Public Service (APS) originally recommended, a spokesperson for AGIMO said that its target applied to only those agencies in which ICT contractors made up more than 10 per cent of the ICT workforce.
“Consequently some Australian Government agencies did not have individual contractor reduction targets,” she said.
The Gershon Report recommended, however, that those agencies with an ICT contractor percentage of greater than 23 per cent should be expected to achieve a reduction greater than 50 per cent. It is unclear from the current iteration of the plan on the Department of Finance and Deregulation’s website whether this requirement has in fact been applied.
AGIMO has conceded that not all agencies were able to reach their reduction targets.
“Where there have been instances of not meeting their target, it primarily reflects the new short-term projects and government initiatives that required supplemental project resources for limited periods.
“The use of contractors can be an effective means to resource short term projects to assist management of peaks in workload associated with project activity,” the spokeswoman said.
These comments reflect the reality of ICT contracting across the Federal Government, where agencies struggle to employ permanent staff with the specific ICT skill sets they need in a tight labour market.
In June 2010, Dr Ian Reinecke suggested that early momentum in converting contractors to permanent staff would be hard to maintain, due to improving economic conditions that made the trade off between job security and income less favourable to the Government.
He also cited evidence that some agencies were bypassing contractor targets through the use of third party suppliers.
“A consultant’s report commissioned by the industry body makes the argument that agencies are avoiding the intent of the Gershon recommendations by contracting resources through service providers and outsourcing vendors as intermediates, at considerably higher margins,” said his Independent Review of Implementation of the ICT Reform Program.
Anecdotal accounts of sub-contracting between labour hire firms and other IT Services providers, heard by Intermedium, support this view.
In dollar terms, the latest ICT Expenditure Report shows that both internal and external staffing costs have marginally increased as a proportion of overall ICT expenditure. Between 2009-10 and 2010-11, expenditure on internal personnel increased from 24 to 26 per cent of total expenditure, and expenditure on external personnel increased from 13 to 15 per cent of total expenditure. The Report also shows that 68 per cent of all external FTE staff work in the applications service tower, compared to just 46 per cent of internal staff.