NSW to outsource ServiceFirst functions



news The New South Wales State Government has followed through on its proposal to outsource key functions of state shared services agency ServiceFirst, inviting the private sector to provide options for the group’s future in a move reminiscent of a similar approach taken by the Victorian Government to its IT shared services agency CenITex.

The state first publicly confirmed in September last year that it was considering outsourcing key functions of ServiceFirst. Reports have long suggested that the agency could be broken up, as well as fellow shared services group BusinessLink.

The move comes a little after a year after the NSW Commission of Audit group set up by NSW’s Coalition administration published a landmark report into the management of the NSW Public Sector, finding that dozens of overlapping and competing systems and services providers had created “chaos” when it came to the state’s current IT shared services paradigm. At the time, the report stated:

“Neither ServiceFirst nor BusinessLink currently meet customer expectations across a number of vital functions,” the report found. “Neither is truly integrated and in many instances the level of service is poor. Nine years after its establishment, BusinessLink is now in the process of integrating its three SAP systems. ServiceFirst has three legacy systems, inherited from its predecessor units. More important, its staff morale is low and customer satisfaction is poor. Clients of Service First are united in their frustration and dissatisfaction with the service provided. To be fair to the shared service providers they have been starved of funds and have not been able to modernise.”

In a statement issued this morning, Minister for Finance and Services Andrew Constance said NSW would invite “the shared services community” to register their interest and outline a new delivery model for ServiceFirst. Constance said the Government was determined to deliver more efficient outcomes and better value for NSW taxpayers, and engaging the private sector was “the best way to achieve it”.

“ServiceFirst provides a valuable service to the NSW Government, but if there’s a better way to support agencies and deliver services, we’re keen to pursue it,” Constance said. “We want to achieve value for money from shared service providers and we are open to different delivery models if it leads to better outcomes, reduced costs and increased productivity.”

ServiceFirst combines 350 staff servicing 46 clients and approximately 7,500 people. Services offered to government agencies include end-to-end transactional services, human resources, ICT, analysis, financial reporting and compliance.

“We intend to explore greater market participation through new commercial models to increase contestability and produce more efficient outcomes for the Government and taxpayers,” Constance said. “A new sourcing arrangement must enhance the NSW Government’s ICT Strategy, support our procurement program and align with other government policies. Any decision will be made on the basis that an alternate model improves services and reduces operating costs to agencies.”

As part of the Registration of Interest stage, which is scheduled for release in April, parties will be invited to present options and respective cost benefits for alternative service delivery models. Responses to the ROI will be assessed against a number of criteria to reach a subset of vendors that could potentially provide services to government. Following market consultation, the NSW Department of Finance and Services may consider later stages. The process is expected to be completed by late 2014.

The Victorian Government recently revealed plans to turn its own IT shared services division CenITex into a ‘broker’, rather than an actual provider of IT services. Hosting, storage, network and desktop services are currently on the agenda to be outsourced at CenITex.

As I wrote in September:

“It’s about time. I fully support the moves the NSW State Government is undertaking here. Like other states such as Victoria, Queensland and Western Australia, it’s doing a terrible job of providing IT shared services to departments and agencies. It’s time for the private sector to have a go.”

Image credit: Phillip Flores


  1. This is big opportunity to IT outsourcing companies. This is a great news from NSW State Government . Aside from cutting the cost, they can assure of better services. Outsourcing provider can be more effective because of their resources and facilities.

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