What is the future of information technology outsourcing in state and local government? According to recent interviews with over 200 state and local officials, outsourcing is not only here to stay, it is accelerating. Sixty-six percent of the officials interviewed indicated they are outsourcing all or part of their information technology today. When asked about the future of outsourcing in their jurisdiction, 58 percent believed the trend toward outsourcing will gain momentum over the next few years. Only six percent believed it will drop off.
This view of the future of outsourcing is held by officials from all levels of government -- states, counties and cities -- as well as CIOs, policy officials, information technology leaders and senior agency executives.
State and county officials indicated the momentum toward outsourcing was strongest in their governments. Sixty percent of all state officials, and 56 percent of all county officials believed outsourcing of information technology was gaining momentum in their government. This is in contrast to over 45 percent of all city officials who believed outsourcing was gaining momentum.
Policy officials and agency executives were the strongest believers in the movement toward outsourcing. Sixty-seven percent of all policy respondents, and 71 percent of all agency executives believed outsourcing was gaining momentum. But even among CIOs and information technology leaders, there is a strong perception that outsourcing is gaining strength. Fifty-nine percent of all CIOs and 50 percent of all information technology leaders saw outsourcing gaining momentum over the next few years.
NEW SKILLS AND TECHNOLOGY
One explanation for the shift to outsourcing is the widely shared belief that outsourcing is delivering tangible benefits, especially access to new technology and skills. Eighty-eight percent of all officials responding believed outsourcing provides state and local government with access to skills, and 84 percent believed outsourcing delivers access to new technology.
Just as significantly, this widespread belief in the advantages of outsourcing is held by all groups interviewed. Eighty-seven percent of all state officials, 95 percent of all city officials, and 90 percent of all county officials interviewed believed outsourcing provides access to skills. Similarly, 83 percent of state officials, 82 percent of city officials, and 88 percent of all county officials interviewed believed outsourcing leads to improved access to new technologies.
FOCUS ON BUSINESS
Outsourcing is allowing state and local officials to focus on their primary business. CIOs especially believe outsourcing is allowing government to focus on its primary business. Eighty-six percent of the CIOs interviewed indicated there are significant benefits in this area from outsourcing. State government officials were slightly more likely than their city and county counterparts to believe that outsourcing was allowing them to focus on their primary business.
COSTS AND CUSTOMER SERVICE
While some cost savings are occurring, surprisingly only 48 percent of all respondents believed there are significant cost-savings benefits to be realized from outsourcing. County officials were more attuned to cost savings, with 54 percent believing there are significant cost-savings benefits from outsourcing.
City officials were more likely to cite the customer service advantages of outsourcing, with 76 percent indicating that there are significant benefits to be gained in this area. In contrast, only 61 percent of state officials and 63 percent of county officials believed there were customer service improvements from outsourcing. Policy officials and agency executives were much more likely to believe in the improvements in customer service to be gained from outsourcing. Eighty-three percent of all policy officials and 77 percent of all agency executives indicated they believed outsourcing led to direct improvements in customer service. On the other hand, only 52 percent of CIOs and 54 percent of information technology leaders believed in benefits in this area.
State and local government officials are seeing many intangible benefits, including different perspectives on how business should be conducted, greater flexibility to meet peak demands, and reduced system development time. Other intangible benefits