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The Future of Insourcing

In August 2012 as part of a budget agreement with SEIU Local 1000 representing state employees, the Brown Administration agreed to create a task force to review outsourced contracts, including many associated with large IT projects. The union’s mission is to project state jobs and generally improve life for state employees.

In August 2012 as part of a budget agreement with SEIU Local 1000 representing state employees, the Brown Administration agreed to create a task force to review outsourced contracts, including many associated with large IT projects. The union’s mission is to project state jobs and generally improve life for state employees.

Common rationales for contracting with a private firm are to ramp up staff for a limited time as a project is developed and launched, or to obtain needed expertise that cannot be found within state ranks.

At the first task force meeting, SEIU representatives presented staff from the Departments of Human Resources, Finance and General Services with a list of 67 contracts worth $1 billion. The theory was, when the union challenged contracts they suspected as “illegally outsourced” to the private sector, they prevailed more often than not. So to bring a together a group of state officials to look at the issue collectively, and include major IT projects such as Fi$CAL, the potential for a major shift in the way state government responded to its IT needs was great.

However, after several meetings and an effort to by the union to train and deploy large teams of state employees to review potentially flawed contracts, the task force did not cancel any projects. They did issue a report, which concluded that California needs to improve training of state employees, update desired qualifications for technical and professional classifications and improve training on contract oversight.

With nearly half of the state’s workforce reaching retirement age within the next 5 years, investing in professional development comes with a risk of talent and skills leaving with retiring staff.

Despite such challenges, the Department of Technology is promoting major efforts to improve training with programs like the Project Academy Series and the IT Leadership Academy. In February, the department released a 42-page guide for IT workforce succession planning. Annual private-sector events like the Public CIO Academy and Project Delivery Forum provide an outlet for sharing knowledge across departments and the IT community, including the private sector.

In fact, more often we are hearing about knowledge transfer programs, such as the effort recently discussed by CalPERS CIO Liana Bailey-Crimmins, who said state staff have taken over maintenance and operations of the pension system’s massive computer database after years of partnering with a contractor to develop and deploy the new system.

Given the new emphasis on professional development and a rapidly changing workforce, with millennials replacing baby boomers, what does this mean for private sector IT vendors? We explore these and other issues in the March issue.

As always, I look forward to your feedback and questions.

Bill Maile was editor of Techwire from 2011 to 2016.