The Australian Taxation Office's (ATO) decision to forgo offshore software development in its Change Program was based on risk and working practices rather than cost or data security, according to second commissioner Greg Farr.
The ATO today announced it would not go ahead with a proposal by vendor partner Accenture to use offshore development work in its AU$400-$450 million Change Program.
Farr told ZDNet Australia that after careful consideration of offshoring, "the risk that concerned me more than anything else" was that remote workers would slow the ATO's parallel software development method.
"As our design work is being finalised, we have people already starting to code bits of the solution. They're working in close proximity all the time," he said.
In a telephone interview, Farr said that using Accenture's development centres in Manila or India would have forced the ATO to change its style of work.
"We would have had to move to a more detailed design operation where more design needed to be done [before development]. It was too much of a risk ... We would have had to setup teleconferencing equipment and other things," he said.
Farr stressed that the ATO was working to short deadlines in the Change program.
However he admitted that there were potential cost savings in the proposal, which would have been shared between the ATO and Accenture: "But it wouldn't have been good if it had put the project at risk."
Farr dispelled suggestions that the ATO had failed to agree on pricing with Accenture, as the two parties never came to the contract stage. Likewise, the concern of data security was "overcome easily" and was not a factor in the final decision.
"We would have been using production data, not the data of Australian citizens," he said.
Farr said he had consulted a range of chief information officers in the private sector who had used offshore services prior to the decision.
Following its decision, the ATO would utilise another 130 of its staff to work on the mainframe processing capability of Release Three in the Change program. This was primarily being written in Cobol, according to Farr.
Release Three would take 200,000 staff days and was due by December 2007, he said.
While the ATO's decision means local workers will continue to develop Release Three, it has not ruled out offshoring in the future.
Farr said the ATO could make use of offshored development: "If the program gets to be at risk due to a lack of human resources ... It would be the question of, if we get behind, can we just throw extra resources at it," he added.