Outsourcing is on a downward trend in the Singapore Government Digital Service.

For the last two years, the team has been trialling a “new and innovative approach” to design, develop and deploy digital services, says Mark Lim, the team’s director. “We prefer to co-source projects,” he says.

What is co-sourcing?

In the GDS office, close-knit teams from both the industry partner and government work on projects together. Essentially, the government is looking for specific skills from the industry, rather than totally outsourcing the projects.

For example, the government’s Business Grant Portal was “built 100% through co-sourcing”, Lim says. There are 40 people working on it – 20 from government and 20 from the industry partner, Cognizant.

In-house developers evaluate and validate people sent by the company to make sure that they have the right skills. “In a pure outsourced model, you can’t do this because the supplier is in charge of the whole project. You don’t know what is happening inside if you do not have the in-house expertise and deep involvement in the projects”, Lim says.

This improves the project management, he adds. “When the team has more sense of ownership, the delivery of the project also becomes better because there is no such thing as ‘blame the vendors’. Instead, everyone on the team works together as one to deliver the best that they can.”

How can governments do it?

There are three things that governments need to make co-sourcing work: the right culture, agile project management, and flexible procurement, Lim says.

Officials must change their mindset towards working with suppliers. They must evaluate the people who are working on the project, rather than the company they work for. “We must identify that while we are buying services from a professional company, the people we work with are individual, talented human beings”, Lim says.

There also needs to be a more flexible approach to procurement processes. Tenders should state the user needs and journey, rather than ask for specific solutions. “This is more user-centric and flexible because there may be nine or ten different ways to do it,” he says. The Singapore Government is currently looking at ways to change its ICT procurement policies to suit the co-sourcing approach.

Why is Singapore doing it?

“In the past, government outsourced everything,” Lim says. Often the industry had to second guess what government is looking for. “This is something that has proved to not always work very well,” he says.

Singapore lost a generation of software engineers in the mid to senior level, Lim believes, who either left the industry or moved to project management roles. Through co-sourcing, government can rebuild its skills. “When industry experts spend six months on a contract working with my engineers and they leave, a lot of the knowledge is retained by my staff”, he says. “At the same time, engineers from the industry gain new knowledge from my engineers.”

The model also helps the team start projects small and scale-up products faster when the concept has been proved. A completely in-house project can start faster, but is harder to scale. “When we have an internal innovation and tech team, we can assist our partner agencies to start faster, and test their ideas iteratively to minimise risk,” he says. “If the idea works, we can scale up using the co-sourcing approach.”

Co-sourcing is also more secure than outsourcing, he says. Outsourcing will require suppliers to have access to sensitive data and systems. With co-sourcing, government doesn’t have to give all of the data to them and can keep the more sensitive parts in-house.

Are any other governments doing it?

Co-sourcing is not commonly used in governments, but has been used by banks for years. There are leading digital teams on both ends of the spectrum.

Estonia outsources software development and hasn’t built an in-house digital team, the Prime Minister’s Digital Advisor has told GovInsider. The main driver is pay – public sector salaries are not competitive with tech companies to attract the best talent.

The United Kingdom’s Government Digital Service, meanwhile, is shifting away from massive outsourcing and building more projects in-house – such as the Gov.UK portal.

But co-sourcing is the rising trend in Singapore, and seems set to be around for some time.