Best Sourcing by Government Agencies

Parliamentary Question by Mr Leon Perera:

To ask the Minister for Finance (a) how many Government bodies have outsourced their IT, HR, customer contact centre or other functions to private sector shared service providers; and (b) in cases where the outsourced facility remains in Singapore, whether Government agencies routinely take into consideration the salaries of those employees in such outsourced facilities versus the salaries earned by civil servants performing the same function before the outsourcing as one consideration in awarding the outsourcing tender.

Reply by Minister for Finance Heng Swee Keat:

Government agencies may outsource certain functions because (a) it is more efficient to do so to reap economies of scale, and/or (b) the private sector has the professional expertise and resources to better perform the functions.  

This approach allows Government agencies to focus on its key priority of public service delivery, and tap into private sector expertise, experiences and resources, when needed. For instance, Government agencies requiring infocomm technology services may either be supported by the Infocomm Development Authority (IDA), or have a core in-house IT unit augmented by the private sector to develop and maintain more specialized IT systems. 

When outsourcing, agencies will typically procure services through an open tender. The award decision will be based on quality factors such as the tenderer’s track record, innovative solutions, and technical competencies, in addition to the price competitiveness of the bid. 

While it is not a government practice to scrutinise the salary terms of their outsourced suppliers, the suppliers are expected to comply with the existing labour laws. For sectors such as cleaning, security and landscape services, the Government has committed to buying only from providers that pay their workers according to the Progressive Wage Model.