Indian IT services provider Wipro has joined the ranks of the multinationals making their mark on the Canberra ICT market, thanks to significant contracts signed with the Federal Department of Human Services (DHS) in recent months, via the Department’s ICT services Panel.
The two contracts, signed at the beginning of December 2011, have a combined value of $3.7 million.
Prior to their signing, Wipro’s only other contracting within the Federal Government market was also with DHS, for a total value of $666,000 from three contracts.
Intermedium has not identified any other Indian-based companies winning this level of business in the Federal Government market.
The latest agreements between Wipro and DHS have been awarded alongside contracts to Dialog (three contracts with a total value of $6.3 million), CSC (one contract for $2.9 million), Fujitsu (two contracts for $3.3 million) and Sypaq Systems (one contract for $1.4million). All have been awarded via the same ICT Services Panel.
These contracts have a variety of commencement dates, beginning November 2011, all end on 30 June 2012, which signals that they could be contracts for labour hire despite the sourcing not occurring from the DHS Labour Hire Panel.
DHS procurement through its Labour Hire Panel this year reached record highs with the agency procuring $65.9 million of labour hire through the panel in the first quarter of 2011-12 as compared to $43.4 million in the first quarter of 2010-11.
This high rate of Labour Hire procurement suggests that the DHS is looking for alternative sources of ICT support for the range of platform integration activities which received $569.9 million in the last Federal Budget.
However, this spate of DHS contracting with Wipro does not necessarily indicate an agency preference for resourcing IT services offshore.
Wipro has recently announced plans to increase local hiring in order to place staff closer to clients for the purpose of sales support and back office operations.
Wipro Chairman Azim Premji has said the company intends to raise the proportion of staff hired outside India to 50 per cent by 2015, up from 38 per cent this financial year, despite the acknowledged IT skills shortages in regions such as Britain, according to Telecom Tiger.The figure will include re-locating Indian staff to overseas locations.
Government agencies have traditionally been wary of ICT labour offshoring. In 2006, the ATO attracted media attention when it was revealed that the contractor for the $665.8 million Change Program, Accenture, intended to have some program coding for the project done overseas.
Ultimately, however, Tax decided against the measure.
"We would have had to move to a more detailed design operation where more design needed to be done [before development]. It was too much of a risk ... We would have had to setup teleconferencing equipment and other things," then Second Commissioner Greg Farr told ZD Net.
However, the 2008 Gershon Report into Government ICT made a qualified endorsement of ICT offshoring, especially in the face of a skills shortage predicting to lead to a shortfall of 14,000 skilled ICT jobs in 2010, growing to 25,000 within another 10 years.
“The potential for outsourcing ICT-related activities to lower cost countries with highly skilled workforces is already being utilised by many private sector organisations to improve their competitiveness.
“For governments, more complex trade-offs have to be made when considering whether ICT-related activities should be undertaken offshore. However, even if political considerations limit the activities to onshore locations, there may be scope for deploying government ICT work to reinforce regional economic development policies,” said the report.
Correction 31 January 2012: When published, this article suggested that the only other Indian company doing significant business in the Federal Government sector was Infosys. However, the figures given actually referred to Infosys Solutions, an Australian company. Intermedium apologises for any confusion caused.