Only fraction of public sector offshore IT. But for how long?

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Less than a third of public sector organisations receive IT services from offshore or nearshore location despite 90% outsourcing IT.

This is one of the findings of KPMG's in depth research of UK outsourcing contracts. The annual survey looks at UK contracts worth a total of £14bn from 230 organisations.
It has some interesting findings which you can see if you follow this link and give Computer Weekly your contact details. It takes a couple of minutes and is worth it because once signed in you can read the hundreds of specialists reports we publish online.

One of the most interesting findings is that only 29% of public sector organisations have IT delivered from offshore or nearshore locations. With cost cutting at the top of the public sector agenda it is probably the time organisations will at least consider offshoring even if they don't do it.

One senior executive at a supplier I spoke to said there is more interest in offshoring and more questions are being asked by public sector buyers.

"The precedent has been set and there is more openness towards it," he said. "There was a taboo but this has been offset by the realities of what is happening."

What are your thoughts on this IT hot potato?

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Public sector outsourcing barely works (if at all) even when all parties are in the same country, speak the same language and understand at least roughly what the government department is all about. So shipping the work offshore is likely to make this situation much worse.

Moving government IT work offshore will also have a lot of hidden costs to the UK taxpayer: loss of jobs in the UK, with knock-on effects across communities where public sector employers dominate, loss of opportunities for future IT graduates in the UK, damage to the UK IT skills base etc. None of these will be accounted for when governments claim they are "saving money" through offshoring, but the negative impact on the UK IT industry and tax revenues will be substantial. The bottom line is that UK taxes should be spent to benefit the UK, not India.

Moving work offshore also removes skills and understanding of the relevant systems from the UK. Look at RBS for a shining example of what happens when you fire all your experienced staff and move work halfway around the world. Do we really want our critical public sector systems to be dependent on companies on the other side of the world?

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About this Entry

This page contains a single entry by Karl Flinders published on September 18, 2012 1:09 PM.

Cabinet Office reiterates tough stance on suppliers was the previous entry in this blog.

More evidence that software testing could be huge IT outsourcing growth area is the next entry in this blog.

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