Offshoring for beginners - the Cabinet Office version

So what to make of the new Cabinet Office guidance on how to offshore ICT?

This well-thought out presentation from the government CIO council is aimed at central government CIOs and procurement specialists who, as it says, may find themselves in a situation where they might "wish to use offshore capability to deliver some or all of the service in question".

The study is less a piece of propaganda for the approach - which may or may not become part of the mix of delivery options in the public sector going forward, at both central and local levels - than a look at the potential downsides.

Thus it talks about savings, productivity and making better use of skills that may in short supply at home base: "The main way costs are saved through offshoring is the difference in international labour costs, for example the average wage for a Senior Software Engineer in the UK is £38,750, however the average wage in the top 5 offshored is only £9,703... OECD estimates that offshoring reduced EU prices by almost 0.2% per annum from 2001-2005". (It does add, in a caveat we don't always hear enough of, that "there will be other costs to be offset against these savings. An average wage of one quarter of the equivalent UK wage may not translate directly into a saving of that magnitude".)

But - in ways that may come up again and again if things like Cloud really finally get going - it says any such savings have to be balanced with security risks it takes very seriously indeed.

Government CIOs are told, for instance, that the threat to information and services may be higher than in the UK and that it may not be possible to carry out some checks that are made nationally. Thus there is a need for a full risk assessment. Meanwhile, any and all offshore operations have to comply with data protection legislation - and data or services related to national security should not be moved overseas. Finally, all ICT systems offshored should be accredited and managed to the same standard as if still in the UK.

The document also talks plainly about vital, but non-technology or process risks - PR. The public relations element of offshoring, it says, as well as the political aspect, is paramount: "If the service currently employs staff in the UK whose jobs would be lost under the new arrangements, you would expect to have to take instruction from Ministers before proceeding... you should be aware that a loss of UK data overseas will be portrayed as damaging and of serious concern. Failure to follow the Government ICT Offshoring Guidance will also be of serious concern." Small wonder it recommends that officials should brief their media teams early in the process.

Is the Council saying, then, that the risks outweigh the benefits? No; using an offshoring plan within a sound business case can reduce risks, it argues. What should such a business case involve? A governance framework and plans for commercial and human resources, security, assurance, operations, legal and policy compliance, transition and business continuity, accompanied by an exit strategy should also be in place if it is necessary to terminate the offshoring.

"In all procurement decisions organisations must adhere to government procurement policy, which is to buy the goods and services that it needs to deliver world-class public services, through a fair and open procurement process, guarding against corruption and seeking to secure value for public funds with due regard to propriety and regularity," the document advises carefully.

The best way to evaluate this document, it seems, is this: as an information resource and guide, not a recommendation.

But the fact that that such an in-depth piece of intelligent advice is now on the table surely suggests that offshoring is a full and legitimate tool in the arsenal of the public sector ICT.

Some certainly think so. "Government departments sending ICT offshore will happen more and more," offers Martyn Hart, Chairman of the National Outsourcing Association, the UK trade association for such suppliers. "This guidance is a clear indicator of that. Data protection is crucial - the NOA welcomes the standardisation of data handing clauses. But data is no less secure offshore - data protection clauses should be a facet of all IT outsourcing contracts.

The Cabinet Office guidance is positive progress, but contains nothing new. The core principles of offshoring are the same as any outsourcing deal - consider your exit strategy right at the beginning. Take the time to ensure it is robustly built into the contract.

"Still, it is good to see government catching up with best practice. If offshoring is to be a part of the austerity plan, Departmental CIOs need to get it right."