India's HCL reassures rattled techos

The Government's move to embrace shared services may not be a bonanza for outsourcers, says Raj Singh, global head of criminal justice and public safety at Indian outsourcer HCL.

The New Zealand Government has signalled plans to merge several of its departments and consolidation of public sector back-office functions in a bid to achieve cost savings and efficiencies in the public sector.

The planned initiatives have raised the spectre of Indian outsourcing firms moving in and edging Kiwis out of lucrative service contracts, but outsourcing is not necessarily the best solution, Mr Singh says.

While the likes of Indian outsourcing giants HCL and Satyam "do outsourcing for a living" and are continuously innovating to achieve efficiencies, other shared services models may be better.

"If you can isolate areas of expertise, you can use them as centres of excellence for shared services. If you believe the Crown prosecution service or the police have better purchasing processes you can make them the centre of excellence for purchasing."

This approach leverages on investments already made by agencies and can ensure stakeholder buy-in – because agencies remain providers, not just consumers of services.

Outsourcing can deliver "big-bang" short-term gains but limit future gains – particularly if departments rush into it without first consolidating and standardising processes.

"You cannot outsource a mess. You can achieve big savings in the beginning but very soon you will not be able to get the transformational kind of outsourcing ... and drive efficiencies on an ongoing basis."

Governments and organisations moving to shared services are often reluctant to relinquish control and there must be some "give and take", Mr Singh says.

"Outsourcing can be a component in shared services but it is not a prerequisite."

He says the Government's move to shared services for back-office functions is just the start, and economic pressures and demands from citizens for better services will see more and more of these functions consolidated.

"Consumers ... are starting to compare what they get from goods and services providers to what they get from governments. And there's only so much you can drive in efficiency out of support processes."

The Government will probably look to establish a "one-stop shop" for citizens.

"Citizens will like to be recognised as a single customer across the departments. Very soon things should move to a common citizen service where you dial one number for tax, one number for land records, one number for police and emergency services and one number for something else."

Nathan Masters, general manager of recruitment firm Ninetwenty, says IT staff in departments that could be affected by the shared services drive are showing some nervousness and have begun to investigate other job opportunities.

The Government has proposed merging the National Library and National Archives and possibly Land Information and Statistics into Internal Affairs, and bringing the Food Safety Authority back into the Agriculture and Forestry Ministry.

The Foundation of Research, Science and Technology will merge with the ministry of the same name.

The Government is also establishing a shared services agency, which will provide back-office services such as payroll to New Zealand's 21 district health boards.

- © Fairfax NZ News