The shake-up of Australian government’s Department of Finance and Administration is abandoning its outsourcing strategy.
It will not renew the outsourcing contract it has with IBM Corp [IBM], which expires in November 2004.
The decision was taken three years after the Auditor-General criticized the contract, and the Finance Department is expected to make savings from the cancellation. The contract had originally been expected to save $700, 000 (A979, 524).
The news is further evidence that the Australian public sector is becoming increasingly averse to large, single-source IT services contracts, which are perceived to be less flexible.
A recent report from the Australian National Audit Office claimed that most federal government outsourcing contracts were running between 20% and 40% over their initial estimated cost.
A number of Australian government clients have announced changes to outsourcing strategies over the past year. The South Australia state government announced in August that it would break up its major $388 million (A600 million) contract that expires in July 2005 with EDS [EDS], into more manageable chunks.
Members of a consortium comprising the Australian Competition and Consumer Commission; the Department of Communications, Information Technology and the Arts; the Department of the Prime Minister and Cabinet; the Department of Industry Tourism and Resources; and the Department of Transport and Regional Services, have already begun to look for multiple new services providers to replace Telstra [TLS], which manages an $66.6 million (A100 million) five-year contract for the group.
This article was based on material originally published by ComputerWire.