BC IT Outsourcing 2019/20

15 Nov 2020

Way back in the 1980s, the Vander Zalm government privatized BC highways maintenance. They let out big contracts to private companies (fortunately this was before the era of international infrastructure firms, so they were local companies) and sold off the government road building machinery. The government employees union was naturally apoplectic and very much wanted the decision reversed. An NDP government took power at the next election, and… nothing changed.

The omlette was unscramblable. The expense and disruption of re-constituting the old highways maintenance department outweighed the cost. The machinery was all sold. The government had other fish to fry. It didn’t happen then. It hasn’t happened yet. Highways maintenance is still outsourced.

With that out of the way, here’s the latest data on BC information technology outsourcing.

The political economy of changing the trend was never good. On the side of change, was a line in the Minister of Citizens Services 2017 mandate letter:

Institute a cap on the value and the length of government IT contracts to save money, increase innovation, improve competition and help our technology sector grow.

On the side of more of the same, are:

• Existing relationships between civil servants and service providers.
• Contractual obligations that still have multiple years to run.
• Fear of change, including risk of service disruptions amidst big organizational changes.
• Comfort of stasis, just renew contracts and keep slowly growing budgets.
• Deep lack of political sexiness of internal IT issues.
• No one at the political level who is invested in the issue. (See previous.)

The UK IT reform experience, which is still ongoing in fits and starts, got off to a fast start because of the enthusiastic backing of the Cabinet Office Minister, Sir Francis Maude. It quickly hit the rocks after Maude retired and they lost his political cover.

Getting out from under these contracts is the right thing to do, but it’s the right thing to do in very abstract and theoretical ways:

• We want government to be more nimble and able to react to changes in society and policy.
• The machinery of government runs on information.
• The closer the people who work on the information are to the people working the policy, the easier it is for them to understand and react to their needs.
• Outsourced IT places a contractual buffer between the people who need the information services and the people who provide those services. It optimizes for the predictable and charges heavily for the novel.

There’s no easy big guaranteed win, and no press conference, and no glory. Just more reactive information services with incentives that align more closely to those of the people trying to deliver value to the people of BC. It’s technocratic, dull, worth doing, and probably not going to happen.

Anyways, back to the horse race.

The big surprise for me continues to be Maximus. Still billing strong, even with MSP premiums phased out? The MSP premium elimination date was January 1, 2020, so maybe this year will finally be the one we see a big drop in Maximus billings.

The continued growth of local companies is a positive trend. These aren’t Mom’n’Pop shops, I don’t track those, but companies with revenues north of several millions. Altogether they are still doing less business than IBM alone, but it’s a solid 10% of the total now.

It’s possible I’m being overly pessimistic. The biggest components of the IT outsourcing budget are the Telus and ESIT contracts, both of which end in 2021. But the easy thing is to just renew and move on, and in a world of Covid and recessions and many other issues much nearer to the daily lives of citizens I would not be surprised to see this issue languish.