Even with the recovery from the economic downturn in sight, governments are still choosing to outsource some of its operations to different outsourcing companies. Governments such as India and the US are taking advantage of outsourcing to help bolster their operations and provide their constituents with quality service.
In the US, companies’ JP Morgan and ATS have both signed outsourcing contracts with the government this past month. JP Morgan (NYSE:JPM), on the 10th of March, was selected by the government of Canada to provide an expanded set of collateral management services for derivatives. Notably, JP Morgan was the first to introduce end-to-end collateral management solutions for OTC derivative service back in 2005. Then on the 16th of March, ATS Corporation (NYSE:ATSC) also landed a $27.5 million, four-year government contract, with the US Department of Defense ATS will be providing the DoD with project management support, IT infrastructure operations and maintenance, information assurance and application software development and maintenance.
In India, Wipro , on the 8th of March, won a turnkey project from the Financial Intelligence Unit, Ministry of Finance, Union Government, where Wipro will be implementing FINnet as well as the development of Portal, Data warehousing, De-duplication, Analytical application, and ERP Implementation at the data center and disaster recovery site of the Financial Intelligence Unit. Later on the 11th of March, Tata Consultancy Services (TCS) (NYSE:TCS) formed a joint venture with the government of Maharashtra to launch an internet based, online citizen services portal for the Maharashtra citizenry.
Government’s meanwhile, are taking the time to recognize companies’ with existing contracts, such as the Harvey Nash’s (LON:HVN) selection by the UK Public Sector as the Preferred Supplier of Recruitment Services.
It’s not all good news however, as troubles are still plaguing outsourcers or the governments themselves. On the 2nd of March, the Canadian Union of Government Professionals accused the Education Minister of wasting money by outsourcing exam correction to private companies, alleging that the cost of the service would be much too expensive. It doesn’t help matters that on the 3rd of March, another government outsourcing project, TCS’ Passport Seva Project, has come under fire once again. The project with the Indian government has yet to materialize following “technical glitches”. Adding fuel to the fire is that employees are vehemently protesting government plans to turn over the management of passport services to a private firm.
Even with the increasing recognition by different governments of outsourcing companies and their capabilities, governments will still have a hard time convincing their respective constituents of the benefits of outsourcing. Even so, it’s likely that a large bulk of profits of some outsourcing companies for this quarter will be coming from government contracts. With the recovery in sight, other private companies may look elsewhere, or even in-house for their business processes. Governments on the other hand, still need to save money, even with the recovery.
Author: Audrey B.