Tan Kin Lian's Blog: Outsourcing of public works

Thursday, July 22, 2010

Outsourcing of public works

I asked a knowledgeable person about flooding in Singapore. Could it be due to the replacement of older, experienced persons by young scholars, without the experience, in the government agency? He said that this was an important factor.

Another factor is the outsourcing of the work, especially to foreign contractors. Many government agencies prefer to outsource to foreign experts, rather than use local experts. The foreign contractors did not know the local conditions and may not give the optimal solution. We are now seeing the possible consequence of this practice. Singapore had been free of flood for man years; why should we get the flooding now?

The practice of outsourcing will deplete the in-house expertise in the government agency. In a crisis, the agency does not have in-house expertise to solve the problem. They have to rely on the outsourcing contractor to solve the problem. The agency has to negotiate the price for this service, and will has no choice but to pay the high price that is demanded by the contractor.

I searched Google for articles about outsourcing. Here is an interesting article about the benefits and pitfalls of outsourcing. It seemed that the benefits are short term, and the pitfalls are long term.

Tan Kin Lian

4 comments:

C H Yak said...: I see two scenarios: outsourcing and "reverse" out-sourcing.

(a) Out-sourcing to relieve direct responsibility; and to avoid having own experienced staff.

(b) Our local Authorities also "get rid" of experienced staff to cut payroll and form "privately" run companies who are more keen to look for opportunities overseas which make more profits.

Best example is HDB and once Surbana ... and recently we heard again that HDB will be split up again so that they can tap into opportunities in Tianjin Eco-city projects.

So you see the shift in emphasis is not to improve competency to make HDB housing more affordable and better here anymore, but to use the setup to "earn" more money in ventures overseas...put neglect of local responsibilities aside, and spendings to improve local built environment.; July 22, 2010 2:14 PM
singapore man said...: The biggest pitfall of outsourcing is the thought of pushing all your problems to the third party will solve all your current problems (the problem would just buried down deeper waiting to blowup), and further more maintaining a "I say, you do" mentality to that relationship will worsen any existing problem (I cannot tell you I got any problem because I still value our contract), this could meant that instead of solving any problems, more problem like quality issue, brain drain, productivity, bogus KPI results and etc… could happen, and strike back when you least expected it.

Good recent examples affected by outsourcing are DBS, BP & Toyota.; July 22, 2010 2:30 PM
Tan Kin Lian said...: Morning Kin Lian,

I totally agree with the writers. It is the price we have to pay for outsourcing. Eg if we outsource to do Project A, these people only focus on Project A and does not assess the implications it may affect by executing Project A. Reason it involves other Govt Dept, too much red tape and no budget so the easier way is to ignore them. Like the Orchard Flood, they straight away 'tai chi' cause due to debris choke which to any child, it is just an excuse. Now with other areas flooding, they just keep numb about it. This is how our civil service work. Talk about implementing QCC and productivity? Very sad.
Oursourcer; July 23, 2010 8:51 AM
Anonymous said...: Being in outsourcing company for almost 10 years now, I agree that still there are lots of people who doesn't agree with outsourcing. Several advantages and disadvantages are sited, so if you have business and you want to outsource, just make sure you know well the company you are going to deal with to ensure that what you expect will be met.; August 03, 2010 9:13 AM