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Michael Logan

The government may transfer its staff as part of a data centre management deal

A government outsourcing project expected to come up for bidding in the fourth quarter could, for the first time, involve the transfer of civil-service employees to the private sector.

The Information Technology Services Department plans to outsource the management of two data centres that  serve small and medium-sized government agencies, according to Electronic Data Systems (EDS), which is vying for the contract.

Under similar outsourcing agreements elsewhere in the world, the winning bidder would own and manage the data centres, with the civil-service workers then becoming employees of the private firm.

'This is the first really big IT infrastructure outsourcing project for the government,' EDS managing director Tony Melloy said.

The project comes as the government  faces increasing pressure to reduce costs. If successful, the project could lead to bolder efforts to farm out  government work to the private sector.

'The whole issue of the budget deficit is providing a stimulus for the government [to focus on outsourcing],' said Charles Cox, EDS vice-president and head of government sector business.

The project could, however, go forward without the transfer of civil-service employees to the private sector - a concept new to Hong Kong and one likely to raise sensitive political issues.

'It's up to each vendor to propose a model,' Mr Melloy said.

But the practice is standard across the industry. Mr Melloy said 60 per cent of the firm's British staff were former civil-service workers.

In the private sector, companies such as financial institutions have found it easier to transfer ownership and management of data centres - along with staff - to firms such as EDS and IBM, which can run the operations more efficiently.

An IBM spokeswoman declined to comment on whether the company would bid for the contract. Another player in the field is Hewlett-Packard.

Should the Hong Kong government make the move, it would be following a global trend set in places such as Britain, Canada and Australia.

'In a lot of countries, when a citizen thinks they're dealing with the government they're actually dealing with our employees,' Mr Cox said.

This allows governments to keep headcounts under control and provides more flexibility in the deployment of human resources.

Mr Cox said the winning vendor would have to reduce the cost of running the two data centres by 50 per cent to make the outsourcing effort worthwhile to both the government and the private firm.

The government's relationship with EDS spans 10 years, about 300 projects and 40 government departments.

All change

The government faces pressure to cut costs

Staff transfers could face opposition in Hong Kong

A transfer would let the government control headcounts



IT outsourcing could put civil servants into private sector