Government adopts active IT outsourcing strategy
15 - 01 - 2003

The Hong Kong Special Administrative Region Government (HKSARG) has been adopting a vigorous information technology (IT) outsourcing strategy to enhance its capacity for IT services delivery, accelerate the delivery of IT solutions, and develop the IT industry locally.

Various modes of outsourcing have been employed to tailor to the needs and objectives of different government bureaux and departments.

The above remarks were made by the Assistant Director of Information Technology Services, Mr Dennis Pang Chi-tat, when he shared with his counterparts the HKSARG's IT outsourcing experience at the E-government Projects and Outsourcing Operations Conference in Beijing today (January 15).

The Conference was organised by the China Information Industry Association with an aim to explore and formulate the outsourcing strategy of China's E-government projects based on the overseas experience and the current development trend of E-government in China.

"Adopting the IT outsourcing strategy has helped to speed up the momentum of our E-government initiative and foster the development of the IT industry locally," Mr Pang told the participants.

"It also enables us to better utilise our in-house human resources, adopt new technology sooner and tap into the talents and expertise outside of the Government," he said.

In the 2001/02 financial year, over 80 per cent of government IT projects were contracted out. This involved $1.23 billion and accounted for 84 per cent of the total government expenditure on IT projects. The latter ratio is expected to rise to 87 per cent in 2002/03.

The HKSARG's flexibility in carrying out its outsourcing policy can be demonstrated in its various outsourcing models.

Examples can be seen in the Intellectual Property Department and the Judiciary which had outsourced non-core services of the department and a full range of its IT services of the entire department respectively.

The Electronic Service Delivery (ESD) Scheme used another outsourcing model, in which the private enterprise contractor financed, developed and managed the front-end ESD portal and services. The contractor is also allowed to provide commercial services on the same portal to generate income.

The HKedCity project, whose web site provides online resources for the education sector, was the result of the collaboration of the Government, the education and the private sectors.

Mr Pang said that outsourcing through turnkey projects, such as the Electronic Tendering System, the Computerised Social Security System, and the Land Registration System, had also been done by some departments. This practice allows the Government to just "turn a key" to start the system to support its services to the public.

Meanwhile, some projects were completely outsourced from the planning, research and development to the provision of maintenance and help desk service. Examples include the Government Office Automation Programme and the School Administration and Management System.

Mr Pang said, "Some government IT projects are outsourced on an assignment basis by using standing offer agreements."

Under the IT Professional Services Arrangement (ITPSA), the HKSARG in 2002 awarded 23 standing offer agreements to 12 companies which worked with some 70 sub-contractors.

Under the agreements, IT assignments can be open for competition by two to four contractors of the ITPSA and are awarded to the contractors which satisfy the requirements and offer the most competitive price.

Ninety projects involving some $70 million have been awarded since the service agreements came into effect in June last year.

Outlining the advantages of the ITPSA to the participants, Mr Pang said, "It simplifies procedures under an established contract and management framework. It also allows healthy competition among contractors and enables us to build up a business-partner relationship with them through a continuous cross-project agreement."

Mr Pang pointed out that the successful implementation of IT outsourcing requires clear objectives, service level agreements, monitoring systems, stringent quality control, sub-contractor management, etc.

"The Government will continue its efforts to work with its IT contractors in a mutually beneficial manner and adopt the most appropriate and effective mode of co-operation to cope with the technology advances and ever-changing market conditions," Mr Pang said.

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