Symptoms of outsourcing IT work – knowledge loss and the transfer of skills

Convenience over skills development

Government outsourcing costs Canadian taxpayers billions of dollars each year and is leading to a deskilling of the federal public service workforce. Staff report that they do not get enough training to do their job^[1] and the knowledge needed to maintain projects often follows contractors out the door when a contract ends.

The government denies its staff the opportunity to acquire expertise in new technologies and the hands-on experience acquired from working on new projects when they constantly outsource new work. Instead of investing in training for their staff,^[2] managers are increasingly turning to consultants who gain all of the expertise and experience on government projects.

The skills and knowledge gained by consultants working within the government leave the public service when the contract ends. When interviewed by the Public Service Commission in 2010, managers indicated that “the loss of skills and knowledge when temporary workers finished their contracts” was a primary disadvantage of outsourcing.^[3]

Skills and knowledge loss are even more severe when managers outsource professional IT services. As the government outsources more and more IT functions, they become more reliant on private contractors to run their own systems. Over time, institutional knowledge and expertise become concentrated within private contractors instead of within the government. The institutional knowledge that accumulates with private contractors makes it difficult to change service providers when contracts end and even more difficult to bring the services back in-house.

Easy come, easy go

One PIPSC member, surveyed for the 2016 Programmed to Fail report, gave an account of the growing presence of consultants in their workplace stemming from hiring freezes, budget cuts, Workforce Adjustment and the Deficit Reduction Action Plan. They observed:

“In a recent large project to develop new functionality for a widely-used IT system, much of the coding was done by contract workers. Our Department had no budget to permanently hire or train for this particular skill; therefore it was forced to look externally to fill the need. However, the minute the system went live, these contract workers left for a new project, with the indeterminate employees tasked to maintain operations.”^[4]

The public servant noted that there was no knowledge transferred, and no training or system documentation in place to allow staff to take over the project once the consultants left. Maintaining and stabilizing the new system after the consultants left was a growing source of frustration in this workplace, and the work became more difficult and time-consuming. The public servant commented:

“We were left to deal with all the problems without adequate training! As a result, the learning curve was steep and our services were delayed. If effective knowledge transfer, training, and transition provisions had been in place, time wouldn’t have been wasted and Canadians would have had better services more quickly. Contractors come in – do the work – then leave with all of the experience. How is that sustainable?”^[5]

Outsourcing: more convenient than hiring?

Poorly designed government HR functions make outsourcing more convenient than hiring new public servants or utilizing skills that exist internally. The slow staffing system, lack of guidance for managers on outsourcing, and relatively easy access to contractors all seemingly conspire to make outsourcing a more convenient option for managers over hiring.

Managers can outsource work if they need to fill in for a public servant during a temporary absence, to meet an unexpected fluctuation in workload or to acquire special expertise not available within the public service.^[6] While there are alternatives to outsourcing in each of these circumstances, managers interviewed by the Public Service Commission say the methods to acquire contractors give outsourcing an advantage in “speed” and “flexibility” overstaffing.^[7] When a manager outsources work, they acquire contractors through two primary methods:

• They can tender a contract for a needed service, which is subsequently awarded to the outsourcing company with the winning bid.
• If their department has an existing “standing-offer” or “supply arrangement” with an outsourcing company, a method of supply used to procure goods and services from a list of pre-qualified suppliers. Managers can “call-up” contractors essentially on-demand.

Both allow managers to acquire personnel resources with more speed and flexibility than through staffing.

Fewer requirements and a lot less oversight gives outsourcing speed and flexibility over staffing. The legislation regulating staffing in the public service, the Public Service Employment Act (PSEA), requires that all permanent appointments be made with consideration to merit, fairness, access, transparency and representativeness.^[8] Outsourcing is not subject to any of the requirements under the Act and is administered with only loosely defined guidelines. The Treasury Board’s contracting policies caution managers “to avoid any contracting situation that would be contrary to or conflict with the PSEA.”^[9] The guidelines do not specify at which point the use of contractors creates such a conflict. Additionally, managers are provided little guidance on how to limit or use professional services in an appropriate way.^[10]

Better digital capacity and services for Canadians

Prime Minister Trudeau, in his 2019 ministerial mandate letters has called on his cabinet to “raise the bar on openness, effectiveness and transparency in government” and build “better digital capacity and services for Canadians.” These better services can and must be provided by trained, public service professionals rather than a shadow public service.

Learn more about the policy recommendations that we will be discussing with ministers and government officials in. These recommendations include specific details on how to treat the symptoms of outsourcing.