Government bodies to recover $49 million technology initiative with internal execution strategy
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Government Departments to Retrieve $49M Tech Initiative via Internal Delivery Strategy
Quick Overview
- The Australian federal government is bringing $49 million in tech services back in-house, thus minimizing reliance on contractors.
- Next year, $527 million in “core activities” will be reintegrated across 104 agencies in 2024-25.
- ICT and digital services will comprise 22% of the reintegrated efforts, not including Defence.
- The Defence Department has decreased its workforce-to-contractor ratio from 80:20 to 60:40.
- The Australian Taxation Office plans to eliminate $31.9 million in IT outsourcing for the upcoming fiscal year 2024-25.
- This transition is part of a comprehensive Strategic Commissioning Framework led by Finance Minister Katy Gallagher.
Federal Departments to Transition Tech Services In-House
The Australian federal government is making decisive moves to lessen its dependency on consultants and contractors by transitioning $49 million worth of technological services back in-house. This action is part of a larger campaign to reclaim “core activities” that have been outsourced over time, spearheaded by Finance Minister Katy Gallagher.
Strategic Commissioning Framework: Reducing Dependency on Contractors
The Australian Public Service (APS) has faced criticism for its substantial dependence on outside contractors, particularly in the IT and digital domains. In response, Gallagher has launched the Strategic Commissioning Framework, which aims to reduce this reliance and bolster the internal capacities of federal departments.
Recent figures indicate that $527 million worth of core services will be reintegrated into 104 agencies throughout the 2024-25 timeframe. Of this total, ICT and digital services will represent 22%, with Defence handling its own considerable reductions.
Effects on the Defence Department
The Defence Department has been a significant participant in Australia’s outsourcing trend, especially regarding technology services. However, it has already begun to lessen its contractor reliance, notably reducing its staff-to-contractor ratio from 80:20 to 60:40, as noted by Defence CIO Chris Crozier. This change is part of a wider transformation of the department’s tech operations, marking an important advance in building internal capabilities.
Financially, Defence has taken on the largest cut in outsourcing, with a $308 million reduction. However, specifics about which particular tech services will be reintroduced in-house remain undisclosed.
Australian Taxation Office’s Plans for Reducing Outsourcing
Another crucial participant in this initiative is the Australian Taxation Office (ATO), which has pledged to decrease its IT outsourcing expenses by $31.9 million in 2024-25. The ATO has historically relied heavily on external contractors for IT, service provision, and data analytics but is now moving toward a more autonomous approach.
Challenges of Reintegrating Tech Services
While the government’s plan to reclaim outsourced services may appear simple, agencies have reported facing difficulties when bringing certain tech services in-house. The Strategic Commissioning Framework report revealed that 67 departments and agencies recognised ICT and digital services as “core systems,” with 55 still outsourcing at least part of these services.
Many agencies highlighted issues with attracting and keeping the skilled personnel needed to oversee these intricate systems, especially considering the competitive tech landscape. Moreover, transitioning from a contractor-centric system to in-house services necessitates not only technical skill but also considerable organizational adjustments.
Finance Minister Katy Gallagher’s Objectives
Since her appointment in 2022, Katy Gallagher has been firm in her commitment to reducing Australia’s reliance on consultants and contractors. Her vision is to reform the APS, enhancing its ability to provide critical services directly to Australians without needing outside assistance.
“When entering government, we outlined an ambitious agenda to reform the APS, and to enhance capabilities, ensuring the APS can deliver the services Australians expect,” Gallagher asserted.
Conclusion
The Australian government’s choice to bring back $49 million in technology services in-house forms part of a broader strategy aimed at reducing dependence on external contractors and consultants. This initiative, driven by Finance Minister Katy Gallagher, seeks to reclaim $527 million of “core activities” across 104 agencies during the fiscal year 2024-25. With ICT and digital services representing 22% of this reclaimed workload, the transition signifies a pivotal move towards fortifying the internal capabilities of the Australian Public Service (APS). Notably, both the Defence Department and the ATO are central figures in this transition, implementing significant cuts to their outsourcing expenses. However, challenges remain, especially in terms of attracting and retaining tech expertise.
FAQ
Q: What prompts the Australian government to internally manage tech services?
A:
The government seeks to diminish reliance on external contractors and consultants, mainly in ICT and digital services, with the goal of fortifying federal agencies’ internal capabilities, enabling them to provide essential services directly to Australians.
Q: What is the purpose of the Strategic Commissioning Framework?
A:
The Strategic Commissioning Framework is a policy set forth by Finance Minister Katy Gallagher geared towards phasing out contractor and consultant usage within the Australian Public Service (APS). It aims to reclaim core work that has been outsourced, particularly in the ICT and digital fields.
Q: What role does the Defence Department play in this transition?
A:
The Defence Department has been among the largest users of external contractors, particularly in tech services. Nonetheless, it has cut its staff-to-contractor ratio from 80:20 to 60:40 and is also making cuts of $308 million in outsourced services, although the specific services being brought back in-house have not been made clear.
Q: How much is the Australian Taxation Office reducing its outsourcing expenses?
A:
The Australian Taxation Office (ATO) is targeting a reduction of $31.9 million in IT outsourcing costs for service delivery and data analytics in the fiscal year 2024-25.
Q: What challenges do agencies encounter when transitioning tech services in-house?
A:
Agencies are experiencing difficulties in sourcing and retaining the talent required to manage complex ICT and digital systems. The transition from a contractor-centric model to internal services also demands significant organizational transformations.
Q: What are the financial implications of this initiative?
A:
Overall, the government intends to reintroduce $527 million worth of core services by 2024-25. This includes $49 million in tech services, with ICT and digital services making up 22% of the reclaimed workload, apart from Defence.
Q: How does this initiative affect the wider Australian Public Service (APS)?
A:
This initiative is part of a comprehensive strategy to reform the APS by curtailing its reliance on external contractors and consultants. By fostering internal capabilities, the government aims to develop a more effective and self-sufficient public service that can better serve the needs of Australians.
