Government and the Technology Outsourcing Pendulum

The question that governments face, and constantly have different answers to, is, “should we outsource or should we do this in-house?”  The answer, over time, has really depended on which is cheaper.  This is the way it should be.  As a shepherd of public funds, governments must constantly strive to achieve their goals with the least amount of money and resources invested. 

In the 2015 State CIO Survey, 79% of state CIOs stated they currently outsourced some of their IT applications and services.  CompTIA’s SLED council embraces the belief that the market-driven innovation derived from strong competition is the way to best serve governments and their citizens.  New and emerging technology trends in government, such as agile procurements, have long been practiced with much success by private sector technology partners.  Once government adopts, trains, and implements many of the innovations that begin in the private sector, we often see the public sector staffing up and insourcing such functions. 

We are seeing a trend where governments are insourcing consulting and technology projects through innovation labs, home-grown application development, and organizations such as 18F and the U.S. Digital Service.  18F, for instance, operates as the federal government’s digital consultant arm and has effectively insourced this function.  18F’s website states, “18F is an office inside the General Services Administration that helps other federal agencies build, buy, and share efficient and easy-to-use digital services.”  They have also expanded their services to allow state and local governments to contract with them.  Some states, such as California, have also stood up digital consultancy or innovation operations within their governments. 

The essence of these sprouting government operations is that governments must somehow feel they can deliver on digital needs cheaper or more effectively than the private sector.  The increased competition will certainly drive the industry to better, more efficient solutions.  The key to this increased competition will hinge on the customer’s ability to choose the best, cheapest solution for their needs.  Government agencies should be able to ask, “should we outsource or insource?” and make the best decision for their technology need.  Whether that lands at an innovation hub, 18F, or a private sector company needs to be a decision based solely on the goals and cost of their needs.