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Outsourcing of Information Technology infrastructure



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Minister for Finance

THE HON JOHN FAHEY, MP

MEDIA RELEASE

16/97

Outsourcing of Information Technoloey Infrastructure

I am pleased to announce the Government's in-principle approval to outsource its Information Technology (IT) infrastructure, subject to the successful completion of competitive tendering processes. This will apply to the Commonwealth Government's IT infrastructure covering computer mainframes through to desktop equipment.

This initiative will generate competition through multiple tenders and deliver economies of scale from aggregating services within - and across - budget-funded agencies. The competitive tendering process will largely be completed within two years.

This initiative will build on the experiences of other governments and private sector organisations, here and internationally, who have already successfully outsourced.

The Government is committed to achieving the best value for its information technology dollar, to support the delivery of services at the lowest cost to the taxpayer.

This initiative creates substantial opportunities for small to medium-sized Australian enterprises. Partnering arrangements with vendors will be encouraged. This will enhance the international competitiveness of local companies through the opportunities created to work with leading edge outsourcers. Small to medium enterprises are also expected to fulfil a significant role in the provision of regional support services which will still be required under outsourcing, particularly for desktop services.

The industry has already indicated there is strong potential for growth in areas such as new data processing capabilities in Australia, scaled to include opportunities in the Asia/Pacific region. Other potential growth areas include new or expanded call centre-type operations in Australia to provide help-desk support services. Employment generating opportunities in regional Australia will be an important factor in the competitive tendering process.

In addition, this initiative will address two other priority matters. First, to ensure the privacy of personal and other sensitive information through stringent contractual conditions; and second, to ensure fair and equitable outcomes for employees so that they are able to make timely and well informed decisions in their own best interest about their career paths.

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Discussions about employee transition conditions will continue with agencies, their staff and their representatives. A significant majority of the 2800 employees currently working in mainframe, mid-range and desktop areas will be able to enhance their career opportunities by transferring to the private sector suppliers.

The move to more open, competitive processes for delivery of IT infrastructure services is in keeping with the Government's election commitment to streamline the administration of Government and apply the principles of competitive neutrality to improve the management of IT services.

The consolidation and outsourcing of the Government's IT infrastructure represents a fundamental change from twenty years of vertical, agency-focussed IT development. The Government will become a purchaser and not a provider of IT infrastructure, with services supplied by providers whose business - and core competency - is IT.

Canberra 25 April 1997

Media contact: David McLachlan 06 277 7400

0419 698 872