Leave tech to experts: private sector's message amid govt insourcing push

Industry Minister Ed Husic officially opened New Zealand IT giant Datacom's new 1000sqm offices at Civic Quarter, on the site of the old AFP headquarters, on Monday.

The business's footprint in Australia, which includes 202 employees in Canberra, has largely targeted government clients, both state and federal, with the firm among the top 10 government contractors in the 2010s.

The company last month posted a A$30.6 million net profit in the year to March 31, 2024, up from a A$1.8 million loss in the previous year.

Company chief executive Greg Davidson said the positive result was the result of an uptick in Australian government spending.

"Over the past year we've seen strong growth in our Australian operations, driven largely by significant contract wins in the public sector as government departments continue to digitise at pace," Mr Davidson said in a statement when the results were released.

On the ground in Canberra, local head Mike Fuller said combining the company's technology with a focus on customer experience had led to the recent wins.

"It's not just about giving people new tools, it's about ensuring they add value, ensuring the experience, that's been a really strong growth area for us, particularly in both federal and state government," he said.

Since coming to office, the Albanese government has sought to build the capabilities of the public service, and to reduce the reliance on outsourcing and consultants for core functions.

Datacom had been the beneficiary of outsourced government functions, including a Department of Home Affairs call centre which the agency is now exploring bringing back in-house.

Despite this shift in government rhetoric, Mr Fuller said there were ways that governments and the private sector could continue to work together, and that the best outcomes involved "getting the balance right" between the public and private sectors.

"It is about being really clear where our value sits, and where that value requires us to lean on a broader base of expertise than what's going to be available to an agency. Allowing government to focus on its core business of supporting citizens and not necessarily getting caught up in some of the more complex technology environments," he said.

At the same time as trying to bring more work back into the APS, the government has modified procurement laws to favour local SMEs. Changes from July 1 include increasing the share of Commonwealth procurement delivered by SMEs, while raising the threshold for local economic benefit to be included in the tender decision.

While it was too early to say if these changes would have a major impact, Mr Fuller said larger organisations such as Datacom would partner with smaller SMEs to meet government targets.

"There is absolutely a place for SMEs to provide advice, and we partner quite often with some of the smaller providers, to give them an avenue to provide services," Mr Fuller said.

"We absolutely support the drive, and we have many instances where we subcontract or we partner with organisations that sit in that space."

As the government continues to refine what role the private sector will play in the ongoing shift towards local, sovereign technology, Datacom managing director for infrastructure products Mark Hile said the sector was rethinking the role technology would play in the public sector.

"It's about applying technology more strategically," he said.

"How it's best applied and how we can best solve Australian citizens' issues. This is where we can play a really important part in the industry in the country."