30 Sep 2009

Fears outsourcing jobs may exclude smaller firms

6:40 pm on 30 September 2009

Some companies fear the Treasury's proposal to outsource Government department jobs could exclude smaller New Zealand firms.

The Treasury is looking at how administration services, such as Human Resources and Information Technology, could be provided more cost effectively across the sector.

It says lessons from the private sector suggest that costs could be reduced by as much as a third by centralising administrative services.

Deputy Secretary to the Treasury Peter Mersi says the cost saving drive is likely to result in some job losses in the public sector, though the numbers are not yet known.

The Treasury met last week with more than 100 small and medium sized firms currently working with public sector bodies.

A technology strategist who was at the meeting, Mike Pearson, says the suggestion that a single provider with experience abroad would be preferable excludes almost 90% of those present.

He says the Treasury strongly resisted any feedback from participants who suggested there could be another solution.

Mr Pearson says the best idea was for companies to try to partner up with bigger providers, to stand a better chance of winning the contract.

Green Party co-leader Russel Norman says the Treasury should be encouraging New Zealand firms to take on contracts of this size.

Roger Kerr, a member of the Business Roundtable, says the Government has two tough budgets ahead so has to look for economies, which means the public sector has to run as efficiently as possible.

However he warns the Government should not take centralisation too far, as some things are better done at a decentralised level.

Requests for proposals may be issued to interested companies by November.