Why offshoring government IT is stupid
I’m live blogging from the uk government IT meeting on agile at the SPA conference. Nothing beats a blogpost fired off in anger 
Here are some tweets I would like to elaborate on:
Me: “Offshoring government it is stupid”
Eric Lefevre (@elefevre): “why? on paper, if there is any way to commoditize software for government, it would sound like a win, wouldn’t it?”
Me: “Software is executable knowledge. Offshoring software is giving a potential enemy exclusive posession of that knowledge.”
Imagine, if you will, the UK code breakers in the 1920’s outsourcing some of their work to Germany, because labour there in the crisis after the first world war was cheap. Manual computations, but nevertheless. What would have happened by 1938?
This is a bit of a straw man of course. However, the problem with outsourcing and/or offshoring is that you put executable knowledge, plus the expertise to grow that knowledge and build knew software from it in the hands of one party. That leads to a dependency on that party. As long as things go fine, that is swell. When things go bad, not so much.
If you think that documentation is going to help. It might, if you are lucky. Most of the knowledge that goes into software is tacit, and very difficult and costly to transfer.
So if you are a government agency (or a company for that matter), don’t be stupid. Keep some good technical people on permanent staff, who know how your crucial systems work, and can make modifications. If you add some external staff to that to be flexible in capacity or bring in specialist knowledge, great!
Just don’t forget to let them work side by side with your permanent staff on a daily basis, so your organisation does not leak knowledge that it can’t recover on its own.
Just remember, knowledge is power. If you’re not careful, you will learn that lesson the hard way.
June 15th, 2011 at 8:27 am
Hi Willem,
As always in life: it depends if that is stupid.
Outsourcing your IT development that is in the mid of your primary processes does include risks regarding knowledge leaking and shrinking. Knowledge is power, indeed. Not only for government organisations, by the way. However, if you know that risk, there are always counter measures possible. If you forget those…..
One thing in your post confuses me: you seem to see offshoring and outsourcing as synonyms. For many people these are different. Offshoring is mostly considered bringing in large distances; moving to India, China or further. Outsourcing is mostly considered bringing it to other parties. Bringing work to another party in Asia would then be called ‘outsourced offshoring’. But not to be picky on you, just to check whether we are tuned in on the same channel.
Most government agencies already outsource significant (if not all) of their IT work, by the way. I agree with you that that is not without risk. However, risk can be addressed. For sure, strategic decisions need to be made what can be outsourced and what cannot (should not) be outsourced. When such decisions are properly taken, the step from outsourced home-shoring to outsourced offshoring is not ‘stupid’ per se.
There are opportunities too, in offshoring. And then I am not thinking about the potential cost reductions that are often promised. I am mostly thinking of the knowledge and education levels in combination with the large number of people that are willing to work for you. Hiring educated and skilled people is less of a challenge than in our tiny country.
So, I agree that when you blindly decide to outsource all of your IT work that is of strategic importance to you, without ensuring you stay in control (of the knowledge component particularly), you might become disappointed. That is why my research is centred around application of agile methods (Scrum particularly) to ensure you are in control on the knowledge part; P.O.’s should not be outsourced, for example.
However, blindly oursourcing everything means generally that the decision makers in your organisation have no idea what they are doing. When that is the case, outsourcing to a knowledgable partner might not be so bad after all
Greetings,
Rini
P.S. My response was not written in anger
June 15th, 2011 at 9:44 am
Why leave it at software? Perhaps the UK should go back and try to recreate an indigenous hardware industry — come back ICL, all is forgiven?
And offshoring food production (by relying on imports) must be pretty dangerous too? Producing food requires a lot of specialist knowledge.
There are very few countries that are totally self-sufficient. Even fewer people.
I agree about keeping enough inhouse skills to maintain critical capabilities in the event of a complete relationship breakdown. But I think a big part of the solution is to work more on building & maintaining effective relationships — it’s pretty hard to survive without them.
August 14th, 2011 at 7:46 am
Hi Willem,
They are doing the same for Army uniform. When a country outsource its strategical assets, it means it is not longer sovereign country.
This just highlight an issue: why are European countries giving away their sovereignty?
Who’s interests is it to compromise government assets?
Why are our own government “collaborating” in that sens ?
Why does a government care about pricing when it shall normally be able to create money to make inflation and therefor easily recover from that kind of “common good” expenses?