news Troubled Victorian Government IT shared services group CenITex has flagged plans to cut another 60 staff from its roster, as wider plans progress to outsource the infrastructure and services currently being provided by the group to other Victorian Government departments and agencies.
This afternoon, CenITex chief executive Michael Vanderheide sent an email to the group’s staff noting that while it was “tracking well against budget and service levels this year”, budget planning for the next year had identified “a significant gap between our known costs and our expected revenue”.
“We have done an excellent job in containing and reducing costs and continuing to meet service targets, however demand and related revenue for the next financial year is forecast to decrease by about 8 per cent, or about $11 million compared to this year, ” Vanderheide wrote.
“This drop is driven in part by a number of our customers channelling some of their spend on base ICT services differently to take advantage of new ICT market opportunities, such as cloud based services. These are the same market opportunities that we are working to access for our customers more generally via Program Evolve. In addition to the impact of the revenue decrease for base ICT services, we also forecast a decrease in project demand and associated project revenue.”
“In recognition of the need to reduce costs to match the available revenue and demand for services, the CenITex Board has confirmed a reduction in staffing costs. I expect this will equate to a reduction of about 60 staff positions overall.”
“Reduction in positions will apply across management and non-management levels, and across corporate, project and operational areas. The reduction will be achieved over the next four months by natural attrition, the consolidation of roles and the removal of roles where demand for services is dropping, or where work practices or priorities change so that fewer resources are required. We will continue to fill essential roles required for specific pieces of work.”
Project Evolve is the name given to the ongoing effort to outsource key chunks of CenITex’s work to the private sector. The packages of work range from desktop and end user services to processing, storage, local area networking and service desk services. In September 2013, CenITex issued an expressions of interest document to kick off the process, and the group has recently published a list of suppliers which it has invited to participate with it in a dialogue about the process.
The project was first unveiled in mid-2013, At the time, the troubled agency’s future had been in a cloud over the preceding 12 months, with the Victorian Government putting CenITex’s formal status on ice pending a number of investigations into its future. Following a series of troubling reports into its ability to deliver IT services to client agencies in the state, and audit reports finding “nepotism and favouritism” in the company’s contractual processes. It has also gone through major redundancy rounds, sacking 200 staff in one event in May last year, for example, and sacking most of its contractors in October 2013.
As part of the Victorian budget this week, the state’s Technology Minister Gordon Rich-Phillips said that some $6 million would be allocated towards the outsourcing process. “The Victorian Coalition Government is committed to transforming the ICT services that underpin the State Government and this funding will continue the procurement of outsourced ICT services,” Rich-Phillips said.
“Responsibility for the next stage of the procurement of the outsourced services is now being transitioned to the Department of State Development, Business and Innovation (DSDBI), which is responsible for whole of government ICT procurement. The transition will provide access to this procurement and other ICT market and project management expertise and will continue to ensure the outsourcing project will be closely coordinated with, and meet the ICT service and transformation needs of, Victorian Government departments.”
Venderheide told staff this week that CenITex had put together a resourcing document that would be provided to staff and the Community and Public Sector Union, with alternative proposals able to be lodged over the next two weeks. Affected staff are currently being informed of their situation and will move through “the normal HR processes”, which may result in contracts ending, redeployment or redundancy. Employee assistance consultants will be made available to staff, and the executive himself will also be taking questions via CenITex’s intranet and through team meetings.
“While I am very confident in the depth of resilience that exists among teams and individuals across this organisation, I appreciate that this is difficult news. Our focus will be on ensuring we communicate clearly and regularly and we are committed to providing certainty to those affected as quickly as we are able to do so,” Vanderheide wrote.
opinion/analysis
More or less expected news. CenITex is being gutted and outsourced to the private sector. It’s a necessary step, but it looks like it’s coming with a great deal of pain. I can only suggest to those affected by the redundancy round that they check out CenITex’s new list of potential partner outsourcing organisations. They may very well be hiring in the near future.