theglobeandmail.com
Canada's IT Outsourcing Costs Exceed In-House Alternatives by 22-25.7 Percent
The Canadian federal government spent $2.6 billion on contracted IT services in 2022-23, exceeding in-house costs by 22-25.7 percent in four departments studied; the total spent on outsourcing rose from $14.7 billion in 2020-21 to $20.7 billion in 2023-24, despite an increase in the number of public servants.
- What is the direct financial impact of the federal government's reliance on contracted IT services, and how does this compare to in-house costs?
- In 2022-23, Canadian federal departments spent $2.6 billion on contracted IT services, exceeding in-house costs by 22-25.7 percent in four analyzed departments. This surpasses the $60 million cost of the ArriveCan app, raising concerns about government spending and contracting practices.
- What factors contributed to the rising costs of IT contracting in the Canadian federal government, and how do these relate to the increase in public servants?
- The Parliamentary Budget Officer (PBO) report reveals that increased spending on IT contractors (2020-21: $14.7B; 2022-23: $18.5B; 2023-24: $20.7B) correlates with a growth in federal public servants (2020: 300,450; 2024: 367,772). The PBO's analysis of 93 IT contracts, focusing on those exceeding 200 days, highlights that contracting out IT services is consistently more expensive than using in-house expertise, even with generous assumptions.
- What systemic issues or future implications arise from the PBO's findings on IT contracting, and what steps can be taken to ensure greater efficiency and accountability?
- Despite government commitments to reduce contracting, the PBO report indicates a persistent trend of higher costs associated with outsourced IT services. The lack of detailed data analysis regarding the justification for these premiums suggests a need for further investigation to determine the root causes of increased spending. The recommendation for an audit by the Office of the Auditor General underscores the need for greater transparency and accountability in government contracting.
Cognitive Concepts
Framing Bias
The headline and opening sentences highlight the increased cost of contracting over in-house services. This framing immediately establishes a negative perspective on government contracting. The emphasis on cost overruns could overshadow potential benefits or complexities of outsourcing. While the report acknowledges the government's commitment to reducing contracting, it doesn't give equal weight to arguments in favor of contracting.
Language Bias
The language used is largely neutral and factual, using terms like "cost taxpayers more," and "more expensive." However, phrases such as "concerns arose" and "a lot of concern" subtly convey a negative tone towards government contracting. More neutral phrasing could be used; for example, replacing "concerns arose" with "questions were raised.
Bias by Omission
The report focuses on IT contracting costs in four departments, acknowledging limitations in data access from other departments. While the PBO mentions concerns about ArriveCan and overall contracting increases, a deeper exploration of other contributing factors to the increase in outsourcing would provide a more complete picture. The analysis lacks a discussion of the specific reasons for choosing contractors over public servants in each case. Additionally, the reasons why contracting is more expensive are not explored in detail; only a general lack of justification is stated.
False Dichotomy
The report doesn't present a false dichotomy, but it implicitly suggests a choice between in-house versus outsourced IT services without exploring alternative models or strategies that may balance cost and expertise.
Sustainable Development Goals
The report highlights that contracting out IT services costs taxpayers significantly more than if the work was done in-house. This increased cost disproportionately impacts lower-income individuals and families, exacerbating existing inequalities in resource allocation. The extra spending on contractors diverts funds from other essential public services that could benefit marginalized communities.