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A Strategic Guide for Local Government On: Outsourcing


ITO allows government entities to focus on their core mission, which is to serve citizens instead of managing technology. By outsourcing components of a business process to an outside vendor, management spends more time on its primary mission instead of managing the IT infrastructure.

The most commonly outsourced IT functions for government entities include help desk sup- port, desktop support, wide area network (WAN)/local area network (LAN) support, data operations and maintenance of servers, applica- tion services and development, and training.

Traditional outsourcing objectives include reduc- ing operational costs, improving IT flexibility, focusing on core competencies, and increasing operational efficiency. By leveraging the ven- dor’s specialized capabilities, the government organization gains access to state-of-the-art technologies without investing directly in the development or exposing itself to more risk than is necessary. Leaders who identify the need for outsourcing tend to be elected offi- cials, city managers or financial officials. CIOs focused on transformation and modernization may also be interested in the opportunity.

The city of Minneapolis, Minn., chose to out- source its IT infrastructure because it wanted to focus on improved service delivery, not on installing and maintaining computer hardware, software and networks. IT now focuses on applying technology to business needs instead of asset management. In addition, by outsourc- ing to a third-party vendor, the city gained data disaster protection and 24-hour service it previ- ously lacked. Now the CIO can focus on new application areas that drive better constituent services, increase use of the Internet and lever- age IT capabilities to better serve the city.


Over the next five years, local governments will face unprecedented pressure to provide better services while maintaining or reducing costs. Outsourcing is one way to address this challenge. Governments outsource when they have decided that the best way to increase effi- ciency, improve performance and reduce cost is to privatize parts of the organization that are not inherently governmental responsibilities.

Outsourcing defies a simple definition. It is used in a variety of different ways depending on the organization and the functions outsourced. The following defi- nitions are commonly used:

Purchasing an item or a service from an outside vendor to replace perform- ance of the task with an organization’s internal operations. The transfer of components or large segments of an organization’s internal IT infrastructure, staff, processes or application to an external resource.

Information technology outsourcing (ITO) occurs when government entities hire external vendors to manage, maintain and/or run some portion or all of their IT infrastructure and/or applications portfolio. Business process out- sourcing (BPO) is another form of outsourcing

The transference to third parties, the performance of functions once admin- istered in house. Outsourcing is really two types of services:

  • ITO: IT outsourcing, which involves a third party who is con- tracted to manage a particular application, including all related servers, networks and software upgrades.

  • BPO: Business process outsourc- ing, which features a third party that manages the entire business process, such as accounting, pro- curement or human resources.

in which a jurisdiction hands over the execu- tion of a business process such as accounting, waste management, procurement, or human resources.

What is IT Outsourcing


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