Whitehall gives nod for increased IT offshoring

With predictions that a £50bn cut in public services spending is needed by 2020, senior Whitehall figures have indicated that they are open to increased offshoring of government IT.

According to Alexis Cleveland, director-general of transformational government for the Cabinet Office, sending some areas of tech work abroad could result in cheaper and better-quality IT services.

When asked how much scope there is to increase offshoring within central government, Cleveland said: "With legacy systems and a lot of back room operations, it could be a fairly high proportion."

"With modulised elements of code and the like, I would see a great cost reduction and improvement in quality through using offshoring," she said at the government's GC Live event at Earls Court earlier this month.

Andrew Gay, acting chief information officer (CIO) for the Ministry of Justice, said there is scope for more work to be carried out offshore in his department, giving the example of application development for a system such as the C-Nomis offender case management system for prisons.

"We spent a lot of money on the development base for C-Nomis," Gay said. However, he added that any new work being sent offshore would have to be carefully scrutinised. "There are some government departments taking development offshore, there is some non-essential personal data that is hosted offshore, but there is not a government policy on it — nor do I think the government would do a big policy on it at the moment. It would have to be judged on its individual merits," he said at the Modernising Justice Through IT conference, also held this month.

The comments come ahead of a report into how much public sector work should be offshored, which the Strategic Supply Board, a cross-government group, will present to the CIO Council at the end of July.

Any government commitment to further offshoring could help meet targets set out under the Operational Efficiency Programme (OEP), the recent report by ex-Logica chief executive Martin Read that sets out the public sector need to use shared services and outsourcing to help it save £7.2bn per year on its IT and back-office systems.

Sureyya Cansoy, head of public sector programmes for UK IT trade association Intellect, which was consulted for the OEP report, said there was some confusion among public sector IT suppliers about how much work could be offshored and welcomed any guidance on what types of work could be carried out abroad.

"Clarity around which parts of government can be offshored would be very useful," she said.

Currently, Whitehall offshores a limited amount of work, including some back-office operations under the NHS Shared Business Services Centre run by Steria and the Department of Health. The joint venture provides back-office services to more than 100 trusts and offshores about 60 percent of its work to India.

The centre's performance has been mixed — despite having signed up one quarter of all NHS trusts, it is about three years behind its target of having 40 percent on board and it is not expected to break even until this year.

However, public sector union PCS has raised concerns over the impact of offshoring on the quality and security of public services.

"Once you start offshoring the lines of accountability in terms of how data is handled, how the contract is managed and how it is delivered become diminished," a PCS spokesman said.

"People need to ask themselves do they want public services driven by a race to the bottom in terms of costs?"