that promotes easier technology integration in these
Government Outsourcing Trend
In 2001, a task force was launched to identify priority actions to achieve strategic
improvements in government and set in motion a transformation of government around citizens needs.
The federal government formulated an E-Government strategy in 2002, which was created to support
multi-agency projects that improve citizen services and yield performance gains. Also, government
mandate A-76 states that Government agencies must conduct thorough audits to determine the lowest
cost and most efficient method of doing business, and to outsource to the public sector when
in-house operations are unable to compete.
As stated in the February 2002 E-Government Strategy document developed by the U.S. Office of
Management and Budget (OMB) E-Government task force, the primary goals for this initiative are to:
||Make it easy for citizens to obtain service and interact with the federal government;
||Improve government efficiency and effectiveness; and
||Improve the governments responsiveness to citizens.
According to the E-Government Strategy document for fiscal year 2006, the federal governments
investment in information technology (IT) is estimated to be $65 billion. The continued investment
made in IT spending provides opportunities for the government to continue to transform itself into
a citizen-centered E-Government and provide additional opportunities for the government to work
with the private sector to develop more user friendly methods of interaction. Past agency-centered
IT approaches have limited the governments productivity gains and ability to serve citizens.
In addition to the E-government strategy, the Administration announced its intentions to open
commercial activities performed by the government to the dynamics of competition between the public
and private sectors, known as Competitive Sourcing. According to Competitive Sourcing, Conducting
Public-Private Competition in a Reasoned and Responsible Manner; Executive Office of the President
OMB July 2004, the OMB estimates that approximately 26% of the 1.6 million workforce from
government agencies are engaged in commercial activities that should be available for competition.
Activities that fall into the Competitive Sourcing agenda include data center services, information
technology services, financial management and logistics.
Other opportunities within the government sector include Business Process Outsourcing
initiatives. According to the U.S. Federal Government Business Process Outsourcing 2004-2008
Forecast by IDC, BPO in general, and spare parts supply chain management in particular, is a
growing opportunity within the federal government. Growth is expected to continue through 2008 and
beyond, as more government agencies see the success for both the Defense Department and civilian
Through the E-Government Strategy, Government agencies are currently faced with pressure to
upgrade technology capabilities and to better interface with their audiences. Combined with the
A-76 initiative that directs Government agencies to pursue the most cost-effective method of doing
business, current federal strategy now enforces governments need to better understand public
alternatives, submit to extensive requests for proposals to an array of government and
non-government providers, and to perform complex evaluations of existing operations and functions.
An ongoing requirement is to migrate the management of systems, data and business processes from
multiple agencies to a joint solution, supported by one or two service providers. We believe these
initiatives will continue to drive government usage of outside sources.
In response to growing competitive pressures and technological innovations, we believe many
companies, both large and small, are focusing their critical resources on the core competencies of
their business and utilizing business process outsourcing to accelerate their business plans in a
cost-effective manner and perform non-core business functions. Outsourcing provides many key
benefits, including the ability to: