Inland Revenue IT outsourcing questioned

DANYA LEVY
Last updated 08:48 17/10/2012

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The Greens are questioning Inland Revenue's multi-million dollar IT contract with a French company specialising in outsourcing work to Asia.

But Revenue Minister Peter Dunne has accused the party of "negative political opportunism", saying the Greens have criticised the Ministry of Social Development (MSD) for building an IT system internally while attacking his department for using a reputable international company.

The IRD is using the Australian-based division of France's Capgemini for the first phase of its transformation project, paying the company $10.6 million in the last financial year.

In a briefing to Dunne last year, it estimated the overall project to upgrade its IT systems could cost up to $1.5 billion over ten years.

Capgemini's Australian division employs almost 1000 staff, 500 of whom are based in India.

Its Sydney-based chief executive Paul Thorley has said the company favours using 30/70 onshore/offshore staff ratio for software testing. For the life of an IT application, that ratio was about 40 per cent onshore and 60 per cent offshore.

"Free markets usually operate for a reason, they operate that way because it's the best answer for shareholders," he told Computer World magazine this month.

Greens co-leader Russel Norman said the Inland Revenue had failed to create a level playing field for New Zealand IT companies bidding for work.

"The whole approach of IRD has been to make it very difficult for the New Zealand IT industry to participate and get the contract.

"If we give a bit of support to the IT industry here now, they can become major export players and in the long term become an important part of the economy but we need to help them a little bit at the beginning."

Using an overseas company meant all profits from the contract went offshore, he said.

The IRD handled sensitive data and revelations this week about security flaws at the MSD showed the Government needed to take extra care with IT systems, Norman said.

Dunne said Inland Revenue was "absolutely confident" it was using the right company.

"One of the key criteria we had was contracting an organisation with experience in guiding a large public sector organisation through a major business transformation. That is what we have done."

Taxpayers expected the Government to get the "best deal possible in every sense", Dunne said.

"I find it extraordinary the Greens were slamming MSD for having built its IT system internally and blaming that for a very serious privacy issue now being faced, and in virtually the same breath they come in from the other extreme against Inland Revenue.

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"I think the two extremes clearly demonstrate what is going on here - harping, negative political opportunism."

However, Norman said MSD could have used a New Zealand company rather than cut costs by developing software internally.

Dunne said Capgemini would be considered for the next phase of the IRD's project if it submitted a tender.

- Stuff

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