by Stephanie Overby

Georgia Is Latest State to Outsource IT

Dec 12, 20075 mins
IT Leadership

Governor Sonny Perdue finally made it official: the state of Georgia will be outsourcing all of IT.

A comprehensive assessment of Georgia’s IT services confirmed that the state’s aging IT infrastructure faces challenges in meeting industry standards and could “create serious risk in providing critical services to more than nine million Georgians,” Perdue said in a press conference on Tuesday.

Eleven state agencies currently do the bulk of Georgia’s IT spending — two-thirds of the total $617 million annual spend. Perdue plans to restructure the centralized Georgia Technology Authority (GTA) to address that situation first. The new GTA will then bring in IT services providers (plural) to bid on the IT services work. The outsourcing contracts (again, plural) will be awarded late next year.

According the Associated Press, Perdue indicated that he is ordering the change as chief executive rather than seeking legislation to enable it. (The Georgia legislature created the GTA, which became an official government office to oversee the planning, procurement and management of state government’s telecommunications, Internet and computer systems.)

A total of 1,100 state technology workers will be affected by the consolidation and outsourcing moves. Approximately 20 percent of the workforce will be eligible for retirement next year; their positions will disappear. Some employees will be shifted to the private companies who win the GTA contracts. And a total of 200 workers will be without a job.

The announcement likely came as little surprise to GTA employees. I’d heard a year ago from some GTA insiders that outsourcing was on the table. They weren’t interested in discussing the plans publicly, for fear of hurting worker morale. So we went to the man at the top. In the CIO interview, Perdue discussed several IT-related issues as well as his plans for more transparency in state government (the latter of which met with varying levels of disbelief in the Georgia state political blogosphere.)

But when it came to whether Georgia would outsource the whole kit and kaboodle that is IT, Perdue remained someone coy (while still leaving himself open to sign IT services deals with abandon): “Georgia is better served with a balanced approach. I believe that GTA can be that internal consultant for IT solutions. From an operations standpoint, the private sector probably has the expertise and experience [to execute our ideas], as long as we know what we want. We do believe we have to retain some IT capability to make sure that we know what the capabilities of the technology are, so that we can put smart RFPs out on the street, and so we can be very clear in communicating what our expectations are. Frankly, I believe that public/private competition is perfectly OK. Whether our citizens can be better served by a public enterprise providing a service or by a private enterprise, they really don’t care.

Georgia is not alone in the public sector in outsourcing IT services on a grand scale. Several states and municipalities have taken a stab at it, including Texas, Virginia, the city of Minneapolis, and the county of San Diego, with mixed results. And according to outsourcing consultancy EquaTerra, more will try. Public sector demand for private IT services will continue to grow as baby boomers retire and the sector struggles with attracting talent, says EquaTerra. Key words like “shared services” and “internal transformation” are already on the tongues of every IT services sales teams hoping to seal deals in the government sector.

It will be interesting to see how the situation in Georgia plays out. Will they take a multi-sourcing approach, some kind of IT services “consortium” a la General Motors? The wording of the governor’s press statements tend to point in that direction. Or will Georgia end up taking the well-trod, but increasingly less popular single-provider route? And how steep will the learning curve be for the first-time outsourcers? If San Diego’s experience is any indication, Georgia could be several deal generations away from getting a good handle on the outsourced environment. If they’re smart, those remaining within GTA will heed the lessons of those who have gone before, in both the public and private sector, about making the transition and managing the relationships.

Meanwhile, having finally let the cat out of the bag on the outsourcing plans, Governor Perdue is keeping busy playing coy on another detail — will any of this work go to an offshore IT services provider? James Salzer, who covers Georgia politics for the Atlanta Journal-Constitution, asked the question, and Perdue said the bidding would not be limited local or U.S.-based providers. Said Perdue: “We’re going to limit it to the people who can provide the best value to the citizens of Georgia.” So… a definite maybe.

 (Interesting side note: Four years ago, Perdue pulled the plug on an evern more ambitious $1.8 billion initiative (a.k.a. fiasco) to consolidate all state government telecommunications under a private contractor, which would have placed as many as 500 state employees on the outsourcer’s payroll. The plan fell apart in the bidding process.)