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Asian crisis threatens Government agenda

Asian crisis threatens Government agenda

EDS (Electronic Data Systems) says the Federal Government's whole-of-government outsourcing agenda is under challenge from the Asian economic crisis, takeover fever and wide-ranging fatigue.

And according to EDS government services director Tony Henshaw, that fatigue is proving a much more serious issue for SMEs (small-to-medium enterprises) than for the large end of town, which can always bring in extra resources whenever timetables pose problems.

"There is a danger that the industry will get fatigued. There is also a danger that the agencies will get fatigued. And there is a very significant danger that OASITO (Office of Asset Sales and IT Outsourcing) will get fatigued because while each of us chooses whether or not we play on a particular procurement, OASITO has to play on every single one," Henshaw said.

Henshaw, a strong proponent of outsourcing who said it had been proven capable of delivering substantial savings, was speaking at an outsourcing seminar organised for the Canberra Business Council.

He said "takeover fever" was proving a serious challenge, with any firm EDS partners immediately becoming subject to market pressure.

That would lead to significant changes for many of the more respected Australian companies, he said, but rejected claims that this was necessarily to the detriment of those Australian companies.

"Is this what developing the IT&T industry is actually about? I think that partially it is. The Government is taking a position that when a small-to-medium enterprise becomes part of a global enterprise, that is an acceptable outcome from the Government's perspective."

It wasn't necessary to retain local ownership in order to develop the local industry, as long as the intellectual capital was retained in Australia, he said.

Of the impact of the Asian crisis on the outsourcing agenda, Henshaw said: "We all know that John Howard called the election in October because he thought that by March we would be in a much less positive state."

Successful outsourcers have signed up to penalties for failing to deliver export targets set as part of RFT (request for tender) responses, he said. This has made the prospect of the Asian crisis -- and, in fact, a European crisis now -- having an impact on export targets very significant, Henshaw said.

"Some of us are really facing some challenges in respect of meeting the Government's export objectives," he said.

Meanwhile, Finance Minister John Fahey told the seminar that if re-elected, the Government would not change its current position in relation to outsourcing and competitive tendering and contracting. In particular, the IT outsourcing program would continue broadly in line with the timetable release late last year.

And Labor senator Kate Lundy said that if Labor gained power, it would review the entire agenda in the light of a new public interest test. She said the relationship between commonwealth procurement and the Australian economy was one of the most under-analysed aspects of the economic infrastructure.

Industry development would be Labor's primary concern as it reviewed the existing program, she said.


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