Local government offshoring verdict: brave, inevitable or naïve?

Birmingham City Council has offshored up to 100 IT jobs.  This is part of an HR and finance joint venture with Capita, known as Service Birmingham. See the full story here.

Although bits and pieces of local authority IT are already completed offshore, this is seen as the first major local government offshoring exercise. As a result it has been controversial.

I put together a questionnaire to get the opinions of readers on Birmingham’s decision.

I simply asked what people thought of the decision and gave them four multiple choice options. These were: brave and pioneering; inevitable; naïve and destined to fail; or other.

So far I have had 58 respondents and the figures are as follows.

Brave and pioneering – 8
Inevitable – 15
Naïve and destined to fail – 26
Other  – 9

The other 9 answers were that Birmingham’s decision is: economically illiterate; short sighted; treason; part of the UK’s financial suicide; unpatriotic; insanity; financial terrorism; short sighted and opens the floodgates for the public sector; premature.

Strong feelings against Birmingham’s move there. I was not surprised that the majority of respondents felt the move was naïve and destined to fail. Simply because most of the readers are UK IT workers.

But having spoken to lots of people about Birmingham City Council’s decision, including people that are senior local government IT professionals, I have been surprised by the lack of outright support for Birmingham’s decision. Many have their doubts.

For example a colleague of mine asked Geoff Connell, chair of Socitm London, what he thought about Birmingham City Council’s decision. He said he does not think the local government offshoring floodgates will open.

“I don’t think we will see much more, I’m not hearing other people talk about it at the moment. I think Birmingham is being brave to be frank. But pioneering that approach and taking a risk is great for the community because we can all watch and see what happens, and if it is successful others will follow.”

Connell says he has direct experience of small scale offshoring in local government. “We have done some offshoring [in the London Borough of Newham] having moved to an Oracle ERP suite which is hosted in Houston Texas and some migration and development work from India. That had mixed results and some things didn’t work so well. [In India] there’s a tendency to say yes to everything sometimes they need to be able to say no. We’ve learnt from the experience and will use [offshoring] again but where appropriate.”

Connell also said this about offshoring in local government:

“Offshoring is a tool that is appropriate to use in some circumstances but comes with a health warning as to where it is and isn’t appropriate.

As a local authority you also have a role to employ local people and develop new talent. So it’s not a panacea.  But having said that price point can be very low and there are times when does make sense.”

I had a conversation with another senior local government IT executive who told me Birmingham’s decision might be “too early.”

He said he thought offshoring commodity services is fine. But he feels that until local authorities truly understand what the government wants to achieve at a macro level, in terms of data sharing, more complex services should not be offshored.

“The documents we have seen from Socitm and the Cabinet Office do not get to the heart of what the government wants to do at a Macro level. I believe Birmingham is going into this blindly.”

He is referring to the fact that the government will want public sector organisations to share information but it is not clear how the information will filtered between organisations.
 
Here are some of the comments I have received via the survey.

A respondent that said Birmingham’s move was premature said: “Local councils can achieve significant reductions via shared services and economies of scale. Politically moving jobs out of the area is difficult, unless there is a compelling offset strategy to show how further jobs will be created. Moving jobs out of the country is more difficult, especially if the councils have gone straight there, as opposed to a later resort.”

Respondents that said Birmingham’s decision was inevitable pretty much all said that the savings have to be made so offshoring is inevitable if service levels are to remain the same.

The respondents that said the decision was Brave and pioneering said things like:

“The right thing to do if it means cost savings which mean more and better services for council tax payers.”

“Innovative.”

“About time.”

“It will reduce costs without reducing services.”

The respondents that said the decision was naïve and destined to fail said things like:

“Local services should be delivered by local people. Service levels will decline and the cost will rise.”

“Customer satisfaction will inevitable decline – public services need local knowledge.”

“If the council’s IT requirements were straight-forward there would not be a need for a massive IT contract with Capita. Offshoring will not offer BCC what is requires.”

“The hidden costs of offshoring, the huge amount of lost tax revenue for the government and soaring wage inflation in India makes this a very bad idea.”

“Offshoring is ineffective in most cases and doesn’t account for lack of business productivity due to ineffective resources and poor comms when justifying it in the first place. Cynical? Nope, experience doing it.”

“Data security, residents concerns, lack of contact between IT staff and end users.”

If you want to fill in the questionnaire you still can. The survey can be found in this blog post.

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