Whitehall warms to benefits of offshoring

After years of resistance to offshoring, the need to cut billions of pounds from public spending could see Whitehall looking to send IT work abroad.

While offshoring is commonplace in the private sector, the public sector has so far shied away from the practice — in part due to wariness of a backlash against sending jobs overseas — even though its supporters insist it can significantly reduce the cost of IT projects.

Indication of a possible shift in public bodies' attitudes to offshoring came last week, however, as the British Council announced that IT jobs could move to India.

It is not the only such hint. Recently, senior civil servants in the Cabinet Office and the Ministry of Justice both told ZDNet UK's sister site, silicon.com, that they are open to offshoring work such as software development.

Whitehall already 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.

A more uniform approach to public-sector offshoring could soon be on the way, however. Jos Creese, who sits on the government's CIO Council — a group of CIOs from across central and local government that discuss IT issues affecting the public sector — told silicon.com there are plans to strengthen guidance and policy around offshoring, "to ensure a more consistent public-sector response to the opportunities and risks".

"The matter is important now because of increasing concerns over information assurance, risk, business continuity and data-security management," said Creese, who is head of IT for Hampshire County Council.

It is important to properly assess these potential pitfalls, he said, adding that offshoring "is definitely not a panacea".

Central government departments are already considering the offshoring of IT under the Operational Efficiency Programme, the Treasury's drive to cut £7.2bn off central government's annual IT and back-office costs, while a report into how much other public sector work should be offshored in the future is currently being developed by the joint industry and government forum, the Strategic Supply Board.

Labour MP Tom Watson, who takes a special interest in matters relating to technology and the internet, told silicon.com that offshoring can be beneficial for government if done correctly.

"There are potential pitfalls but with the right implementation and sensitive industrial relations, all government departments can make significant efficiency gains," he said.

"All government departments have been asked to make savings in administration costs. There is no doubt that technology, when used right, can not only cut costs but also improve government services to UK citizens."

Steve Palmer, president of public-sector IT association Socitm, said public bodies should consider offshoring as one of the many "tools in their armoury" when providing IT services.

"In the current economic climate, the public sector is going to be exploring lots of avenues to streamline how it provides services," he said. "I expect that everybody would look at all the opportunities available given the financial pressures we are going to see."

But Sureyya Cansoy, head of public-sector programmes for UK IT trade body Intellect, warned that there are still many obstacles to offshoring government IT work. "The economic pressures might well see an increase [in public-sector offshoring] but I think there are considerations in addition to cost that the government will take into account, such as the effect on UK employment and the consideration of information security of information handled offshore."