This paper is trying to analyse two issues in IT management (IT HRM and Outsourcing) from two organisations, Australian Department of Defence and Australian Taxation Office. Studies are conducted by interviewing two management staffs from both organisations through emails. The first topic is focusing on how Australian Defence and ATO have used IT HRM, their methodologies and strategies in IT recruitment, different circumstances between the two and careful comparison between them and general IT HRM theories gathered from various literatures. The second topic is concentrating on IT Outsourcing issues in both organisations. Australian Defence and ATO are unique government bodies as they are not only dealing with business or general organisation’s issues, furthermore, their roles as the two biggest Australian public organisations carrying sensitive and critical national issues have positioned IT HRM and Outsourcing concepts in unique manners. Literature review will show how both topics are implemented in a common business practice.

INTRODUCTION

This paper is structured in such a way to clearly shows how our discussed topics, IT HRM and Outsourcing are implemented in both Australia Defence and ATO. Literature analysis is gathered from various resources (international journals, publications and scholar findings) which will be used as a guide on how both topics should be applied in organisations and how they are differing with our two studied organisations. We found limited resources for IT HRM as not many papers differentiating specifically IT HRM from other HRM concepts. Electronic library from Victoria University is used as main sources (ABI Inform, Emerald and other unbiased scholar papers).

ORGANISATIONAL BACKGROUND

Australian Department of Defence

Department of Defence’s main aim and goal is to defend Australia and its national interests. Department of defence is mainly made up of four different divisions, which are Army, Air force, Navy and Civilian. Department of defence is inarguably the biggest employer in Australia with hundreds of thousands of employees. It has operations spanning in various countries like USA, Indonesia, East Timor, Middle East and many more countries. In Australia defence has got more than 60 bases, where from training to combat operations are undertaken.

For every base in Australia and for most of the operations around the globe, IT support is provided from Australia. Every base has got an IT department, which will be looking after that particular base or area only. Every IT department has got an IT manager that is for every base there is an IT manager whose responsibility is to maintain the department which mainly looks after LAN (Local Area Network), WAN (Wide Area Network), creation of users, updating user profiles and dealing with day to day local operational requirements.

Major developments will be undertaken in Canberra only. Canberra is responsible for all the upgrading and implementation of new systems and providing support for national users. This organisation has got every best system available in the world to date.

Figure 1

Australian Taxation Office

The Australian Taxation Office is one of the biggest public sectors. It is one of the top ten organisations as employer, which has got tens of thousands of staff. Its main objective is to provide Australia with necessary budget by collecting taxes from individuals to corporations. Like other public sectors ATO has got local IT branches located at every site, which deals with day-to-day support in performing operations. ATO has got most of the available systems implemented.

The ATO is a large and diverse public sector organisation whose role is to support the Australian Community through the design and implementation of the country's taxation system. The scope of this role is reflected in the wide variety of work undertaken by the ATO and in turn by the diversity of the people who build a career within it.

The ATO has Branch offices throughout Australia and the National Office in Canberra. The ATO Information and Communication Technology line of the ATO delivers and maintains software solutions in support of the Australian taxation system.

The business teams located throughout Australia to support the ATO Business functions but the major Software development work carried out in Canberra and some project development works are going on in Brisbane. All the implementations will be carried out in Canberra as well.

The support is provided in the form of Help desk. Every ATO site has got a help desk, which will provide level 1 and level 2 help. The help desk in Canberra will provide all system support for national users.

Responses to is planning questions

Australian Department of Defence

In defence the following methodology (Planning Strategy) is followed. Demand will be scoped by business area generating the requirement. This scoping will be forwarded for technical assessment. Once the process is completed a steering committee will judge the merits of the requirement. If the requirement is justified then the committee will request for a detailed plan containing issues such as costing, timing, and implementation. Once the planning is completed steering committee will meet again to discuss any changes needed or if every thing is clear they will approve and usually funding is provided at this stage.

Depending on the nature of the project planning will be only for few months. For large projects how ever they could plan up to five years ahead.

As defence has got multitude of agencies, and every agency has got its own sub corporate plans to achieve its own outputs. If possible IS planning will cover all the agencies needs. Due to this most of the times the project planning gets delayed as, all stakeholders needed to be satisfied and project as well has to satisfy their needs.

Steering committees are made up of different personnel, usually one from every agency, so that each and every agency’s corporate plan is met.

Without planning steering committees will never approve the projects. Some times extra funding will be given for well planned projects, which will allow the project not only to meet the requirements of the original agency, but also can fund the add on functions to meet the other agencies requirements.

As the plan tends to be dynamic, success of such is difficult to measure. Most of the times for the long term project the plan will be changed to meet the requirements and outputs, so the success is not measured against the plan. But instead success is measured against the post implementation issues that arise for the project.

Australian Taxation Office

Methodology of IS planning strategy used in ATO.

Figure 2

The inputs into each plan are categorised into these areas and are tailored to relevant planning levels.

· Environmental / Industrial scans

· Internal and External feedback and consultation

· Staff input

· Leadership teams

· Community and Government strategic partners

· Customer feedback

· Swot analysis

· Organisational performance review

· Internal and external assessments.

The preparation of plan will be according to the available time frames. All plans will be accompanied with communications strategy and requires ensuring all staff has the opportunity to understand their responsibilities in relation to these. At the commencement of each planning cycle, previous plans will be reviewed and evaluated.

· Usually IS plan will be done 3 to 5 years ahead

· IS plan is a sub set of corporate plan and very much coupled with corporate plan. Budget is only allocated to projects that are in IS plan and are moving towards corporate goals.

ISSUES studied

IT Human Resource Management (HRM)

IT HRM concept is not far differ from general HRM however as IT is an expensive and rapidly growing issues, IT HRM is understandably more important and starting to grow as an independent topic in companies. IT HRM discusses various IT issues in relation to human resources such as IT help desk, IT staff recruitment and retainment as well as career improvement as part of companies’ knowledge management. We are focusing on different methods of IT recruitment / retainment and career development, how they are related to each other and applied to our studied organisations.

Literature Analysis

In every organisation Human resource department deals with recruiting of staff. IT HRM deals and covers with people who are working in IT and looks after the handling of HR tasks. It deals with management, professionals and support staff. Management consists of people like CIO (Chief Information Officer), MOT (Manager of Technology), and Director of IT. Professional team consists of planning staff, policy analysts and support staff, who mainly looks after providing level one and level two supports to the users.

IT HRM consists of components, such as Hiring, Turnover and Retention Strategies, Career Development, Training, Compensation, and Performance appraisal.

· Hiring

o Online recruitment

According to Allan Roe (2001), who is a senior consultant at Canadian Tyre Corporation, recruiting over the Internet has changed the way organisations are seeking candidates and vice versa for the candidates as well. It has changed the way of recruitment rapidly and made the organisations reengineer their recruiting process. In some cases it has proven to be more expensive when recruited through Internet than the traditional way.

o Outsourcing.

Many consulting firms have emerged to deal with the raising demand for IT professionals. These firms will provide assistance from recruitment process to supply IT professionals when required by the organisations.

o Graduate recruitment programs.

Recruiting the fresh graduates from colleges has proven to be very successful over the past 7years and most of the organisations are willing to use this method for recruitment, as it will provide both company and the graduate a clear view of each other over the given period of time (Carolyn Pilgreen, 2000).

o Advertising in News Papers.

This is a traditional way but proved to be very effective as great deal of the recruitment still depends on local and national newspapers.

o Job fairs.

Organisations should participate in job fairs to clinch the potential IT personnel.

o Employee referral programs.

With IT personnel in demand most of the organisations are using their employees to recommend any potential candidates. Most of the organisations are rewarding their employees to find IT personnel.

· Turnover and Retention:

Many IT organisations have realised that retaining their staff would make significant change to the development of the company. Some of the strategies for retaining people are:

o Showing them how to grow in the organisation.

o Providing challenging works to do rather than routine work, which could lead the employee to loose the interest in his/her work.

o Treating every individual according to his/her own needs.

o Providing career growth.

o Recognise and reward.

· Career Development

Providing opportunity for professional development by providing career path. Professional development can be offered by giving existing employees the first preference over the new applications.

o Training

Many organisations have discovered that in order for success they must function more in a professional way. Providing training to technical and non-technical staff, would give a better result for the employees. It would let the employees gain confidence in their work. Training includes, on job training, sending for seminars, and providing time and financial assistance for attending off site classes. Most of the organisations are providing their employees with specific training that is useful for their career development and progression. According to Aaron Agarwal and John Farrell (1999), Motorola has developed a partnership with more than fifty universities for its employees to take the advantage of advanced education and training programs. Most of these programs are specifically designed for Motorola Corporation to suit and meet its requirements. These courses are offered to the staff by distance learning method.

o Compensation

Most of the organisation will pay top dollars for highly qualified and experienced technical staff. But it will not be the case always as some of the top organisations set the compensation at a lower level. By providing better compensation level most of the employees prefer to stay when compared to low-level pay employees. Using salary administration from the HR’s department will help in determining the compensation levels. Other form is to provide extra benefits along with low compensation level.

o Performance and appraisal

By providing employees with performance based goals and appraisal will be able to keep and retain them with organisation for a long time.

o Supporting users

Most of the organisations have implemented help desk and user support policies. There are three types of support. First one is Help desk. Support staff at this stage will only provide level 1 and level 2 supports to the customers. The second one is online help, where users send their request and support staff will provide with answers. This will help improve customer satisfaction (Brat Greenwood, 1999).

Australian Department of Defence

There is no special recruitment process for this organisation. Basically the recruitment process has to follow strict guidelines laid down by Commonwealth and Department of defence. Usually within the guidelines there will be selection criteria and duty statement, which will expose the candidate to certain skill sets, which are required for the job. In the interview only questions relating the selection criteria will be asked. These questions are very specific to IS and the recruitment is no different to other agencies.

There are eight different job descriptions and three hierarchical levels in this organisation. Ratio of managerial is one manager to seven staff.

Depending on the positions some positions must be filled by qualified people. For programming and IT jobs the candidate should have a tertiary qualification relevant to the field. With some exceptions certification from software companies will be accepted. Generally experience counts a lot.

Usually most of the work is project-based; most of the positions do not tend to change the nature of work. Where there are multiple projects running simultaneously, staff will be given opportunity to diversify their roles between projects. This is the usual procedure for the staff at the same H/R level or Contracted staff.

All staff will be given necessary training before giving access to the system. There is a government guideline, which has to be enforced on training. About 6 % of the staff costs need to be spent on training. These training costs can be used to acquire new skills or reinforce existing ones. The minimum requirement for these courses is that training satisfies work related needs. Often training is provided to enable promotion or to equip someone with new skill set.

Succession planning is important part in corporate planning. Particularly when IT personnel there is lot of turn over. Part of the succession plan is to train subordinates, so that they can handle the job in case of sudden departures. All the processes are documented thoroughly and stringent change control procedures are in place. If a team member of a development team leaves, due to the change control process and processes being documented, there is no problem continuing with the job.

Australian Taxation Office

Applicants need to address selection criteria ranging from three to six questions. Short-listing for the interviews will be done depending on the responses to the selection criteria and referee reports.

ATO is one of the largest IT organisations in Australian public service. There are plenty of job descriptions in the organisation and those job descriptions are dynamic. Each job description varies depending upon the requirement of duties to be carried out.

There are five hierarchical levels ranging from ITO 1 to EL2 and there is no fixed ratio for manager to IS staff, though mostly the ratio will be one to five.

Minimum requirement for IS staff for the recruitment is a degree or a Diploma in Information Technology. Career progression plan is provided for all IS employees and depending on the requirement of the duties, the IS staff has access for training.

These four methods are followed to manage the turnover of IT professionals:

· Graduate recruitment programs

· In house advertisements for transfers

· Higher duty allowances are provided to temporarily manage some duties

· Separate body exists for recruitment activities to avoid delays

Comparative analysis

There are some issues identical in both the organisations with current issues. When hiring in the current practices there are various methods used in hiring. With both the organisations using only one type, which is using selection criteria or duty statement, where most of the organisations now a days use, various methods like online, outsourcing, advertisements in news papers and employee referrals. The interviewing techniques are different compared to current practices.

In current situation the interviews are conducted rigorously, where as with both department of defence and Australian taxation office, interviews are conducted to ask only questions relating to the selection criteria.

The size of the IS organisation varied from organisation to organisation. Both defence and ATO have differed from each other and in current practices as well.

In current practices in some organisations there are more twelve-job descriptions. While in defence there are three types of job descriptions, at ATO there is no certain number given for the interview.

While in Current practice there are more than nine hierarchal levels, Defence has got only three levels, compared to five levels in ATO.

There is no ratio of IS manager to staff in current practices, where Defence has got one to seven, compared to a minimum of one to five in ATO.

When compared to minimum requirement for qualification it is similar with current practices, Defence and ATO, where a diploma or a degree in IT is needed. In addition to all this Defence will consider work experience and a certification from Software Company.

When career progression is compared between current practices and both the organisation they have different approaches. In current practices the current employees were given first preference over the new applicants. In ATO there is career progression, but didn’t have much of information on that, where in Defence where it is available existing staff will be given opportunity to perform those duties.

When training is considered current practices have got more to offer than the two organisations. Some of the organisations like Motorola have joined forces with universities to train their staff. This can be done through distance learning as well. When considered with ATO the training is provided depending upon the job requirement and at Defence all staff will be trained according to the government regulations. Around six % of staffing costs are spent on training as required by the legislation and as long as the course satisfies work related needs.

In ATO recruiting professionals through graduate recruitment programs manage the turn over of IT professionals, where as in Defence subordinates will be trained to manage the work in case of emergency, whereas in the current practices new recruitment will be used.

IT HRM Comparison Table

	Literature	Defence	ATO
Hiring Techniques	Employee referrals Internet, Advertisement Outsourcing Job fairs Graduate programs	Selection Criteria Duty statement Internet Advertisement Graduate programs	Selection Criteria Internet Advertisement Graduate programs
Response Time	Very fast	Could be up to 6 months	Could be up to 6 months
Career development	Yes	Yes	Yes
Training	Effective training will be given	Six % of the staff costs need to be spent on training	Training will be provided if related to work
Hierarchal Levels	Many	Three	Five
Turn over Policy	Normal recruitment	Graduate programs will be conducted and candidates will be placed on order of merit, which will last for one year	Graduate programs will be conducted.
Performance appraisal	Yes	Plan on a page will be developed for every six months	Performance evaluation will be conducted

Figure 3

IT Function outsourcing

IT outsourcing is the way to delegate one or more non-core IT function in an organisation. We found this topic interesting as more and more companies are outsourcing their IT function. Because the nature of IT which grows rapidly, many companies found that investing in IT system in-house while trying to keep up with technology in order to stay competitive is no longer affordable. The costs involve in having internal IT functions can be horrendous, not to mention the cost of training and upgrading. For large organisations, this still can be done, but for the small to medium businesses, this simply becomes just a dream. The drawbacks and problems are always waiting around the corner and without careful plan; outsourcing can be disastrous not only for the outsourced system but also the whole business.

Literature Analysis

Drivers and Benefits of IT Outsourcing

Outsourcing in various IT functions within a business has become nowadays’ trend with an obvious reason, “specialisation” as every company is enforced to concentrate on its core business function. Financial issue admittedly becomes the biggest reason heightening the needs of any outsourcing. In details, IT outsourcing is mostly driven by its tempting benefits:

· Rapid development in dynamic IT world

IT is the fastest growing system which requires a serious commitment in both financial and resources to be adequately implemented. For many small to medium size of businesses, this need is way out of their capacity and yet they still have to have state-of-the-art system in order to compete in the market. IT outsourcing will help these companies to accommodate the needs of modern IT infrastructures without significant initial costs in virtually no-time (Costa, 2001).

· Minimising / sharing risks in IT investment

Even for some who might think that “keeping up” is affordable, they still hesitate to implement new systems. Any new systems are notable carrying different sorts of issues and risk to various failures. Unless for enterprises which have got virtually unlimited resources, single failure may turn become a complete company disaster. By outsourcing an IT function, the risks can be mitigated or shared between internal capacity and external providers (Chen & Soliman, 2002).

· Lack of expertise in internal IT staff

Most of existing staffs in a company are lack of knowledge outside their current expertise/tasks therefore they are often not ready for any major changes such as new system implementation. High cost required in staff training every time a new system introduced has put many companies off. They do not want to spend extra dollars to train their staffs to operate a system which may only last for a short period of time. Outsourcing allows them to “rent” a system without committing big investment and for a long time (Chen & Soliman, 2002).

· Waiting until the technology matures

Some companies play a safe strategy by letting the new technology being tried and implemented widely for a while and when it is well matured and stable, they consider implementing it in-house. However, outsourcing can be a temporary option when needed urgently (Chen & Soliman, 2002).

· The need to focus on core business activities

It is important for businesses to concentrate on their core business functions in order to compete with others. Broad vision is often resulting in lower quality of products or services and poor management compared with others those specialising in a particular function. By outsourcing their non-core business functions, companies may dedicate their attention and resources towards their main business functions (Costa, 2001).

· Cost reduction in operational and management

Managing a large system with multiple functionalities requires complex commitment throughout the management, not only in resources but more importantly costs. As the company growing bigger, the problem can be even more complex and the cost to manage it will be higher as requires ranges of expertise. By outsourcing some of these non-core functions, the costs and complexity involve in operational and management can be reduced (Chen & Soliman, 2002).

IT Functions to be outsourced

In the early days, companies only outsourced their minor tasks considering the size of the company and at that time most of them concerned about their confidential data and privacy issues. Now, as privacy policy and confidentiality issues have been addressed and companies have grown as enterprises, the trend move toward business functionality outsourcing. General outsourcing may involve the following (Claver & Gonzales, 2002):

· Hardware maintenance (i.e. computer, printer, network)

· Programming (i.e. software contractor, in-house programming)

· Software maintenance (i.e. upgrades, updates, troubleshooting)

· Application analysis / business analysis

· User training

Advanced outsourcing (ASP – Application Service Provider)

· eCommerce

· CRM

· ERP applications

Potential problems in IT outsourcing

Although outsourcing can be an instant solution for various IT functionalities, its existence has to be carefully planned, structured, agreed-upon and monitored along the ways of its implementation. Outsourcing is comprised by two or more entities with different interests. Here are the potential problems which may arise in outsourcing following (Claver & Gonzales, 2002):

· Lack of experience in outsourcing

Outsourcing can be a really difficult plan for new players. A lot of legal, quality and management issues within the agreement. That is why a Service Level Agreement (SLA) plays important roles in every outsourcing therefore its development is the most important steps in overall outsourcing plan.

· Conflict of interests

Every company has different interest and so its expectation and goals. In outsourcing, different entities would normally have totally different interests which make outsourcing reluctant to stability.

· Dynamic IT requirements

Good is no longer good when the better has been invented. This quote clearly shows that in IT world, standards and expectations are changing rapidly therefore outsourcing re-agreement and constant review is a must.

Australian Department of Defence

As we expected, Australian Defence as most other countries’ defence departments are particularly hesitant with any external connection. Australian Defence does not outsource any of their IT function, nor do they like to outsource any other function within the organisation. Australian Defence code-of-conduct in particular is subject to conform to the whole government direction.

Government regulation clearly underlines IT environments can be outsourced and at what circumstances this outsourcing can be done. Up until now, Australia Defence has never outsourced any of their IT function and there has been no indication that it will do it in the future.

Defence department is a unique fully government-funded organisation which has virtually unlimited funds therefore they do not need to outsource any of their function. In fact their technologies are so advanced, they have the latest systems and infrastructures available in the world and yet most of their projects including IT are secret and secured by all internal regulation.

Their main concerns on outsourcing are security issues, protocols and accountability. Security issues have always been existed in any organisation. IT in particular is an extremely vulnerable system and always become the prime target of any modern threat. Australian Defence concludes that the only way to avoid such problem is by closing any possibilities that may leads to it including outsourcing.

Another issue that keeps Defence department away from outsourcing is incompatibility issues. It has such sophisticated systems which may be integrated in its own ways and there is no way they will alter their system to suit others and no compromise whatsoever. This obviously opposes outsourcing nature of “working in team”. Australia Defence also praises perfection and intolerant to any unreliability. There is no other organisation in Australia that has such ability; therefore outsourcing will never be in Defence department agenda.

Our interviewee from department did admit that he/she personally see good benefits of outsourcing if developed in accordance to the scope set within the contract. He/she argued, two persons may result better quality of product/service than one person.

Australian Taxation Office

ATO on the other hand outsourced some of their IT functions despite the fact it is also public-government-funded body. ATO is mainly outsourcing their infrastructure management and helpdesk. The IT infrastructures it outsourced are networking and hardware whereas the helpdesk parts it outsourced are the level one and two supports (the lowest two levels helpdesk in the organisation.

The benefits ATO get from outsourcing are mainly from cost savings. ATO however use this outsourcing benefit to concentrate more on future technologies and visions instead of the routine operational tasks. ATO is supposedly having a lot of funds to develop any systems required in their IT function.

IT outsourcing does however give ATO other problems. Their first problem is additional paper work required. As any other kind of cooperation between two or more organisations, IT outsourcing requires all sets of analysis, planning and agreement which obviously done in papers. For ATO, this is causing inefficiency within their integrated system.

Another problem ATO confronted is the needs of constant monitoring on their IT outsourcing agreement and contract management. Since outsourcing leaving them no control apart from whatever in the agreement and yet some of these outsourced IT functions are done off-site, ATO has to progressively monitor the performance level and checked against the service level agreement.

The ultimate problem ATO encountered with IT outsourcing is the extended lead time. As ATO has no control over the outsourced functions, every time there are hardware or network failures, the response time is always longer than what expected. Even though this may still be within acceptable level in SLA, ATO found it significantly longer compared when they in-sourced those functions.

ATO measures the success of IT outsourcing by monitoring it against SLA and ATO will continue to outsource these functions as they found them uncritical and they can save some money to be used for more necessary needs. ATO for obvious reason is NOT outsourcing their ERP functions.

Comparative analysis

In literature review we found that most of IT outsourcings are driven by the needs to keep self up in a rapid development IT world and lack of expertise in internal IT staff. This is obviously not the case on our two studied organisations. Australia Defence is “committed” not to outsource anything including their IT function. Despite their unlimited funding, their superbly advanced technology is way beyond other organisations’ ability including the best Application Service Providers (ASP) in Australia. ATO on the other hand, is using outsourcing for their uncritical IT functions to concentrate their resources for more important functions including their advanced ERP systems.

While many enterprises outsource their advanced IT functions such as eCommerce, CRM or any other ERP applications, ATO that carries extremely important and highly confidential information is restricted from major IT outsourcing. ATO as one of the largest employer in Australia certainly has enough capacity to handle even the latest technology available. ATO does use IT outsourcing to help them to concentrate on their core business activities and to reduce cost of operational / management of these non-critical functions.

Potential problems we found in literature review are turned-out not being the issues in ATO IT outsourcing. This may be the result of careful planning, their experienced outsourcing analyst and the fact that all their outsourced functions are general IT functions which have been well established and standardised.

The real problem in ATO came from minor issues such as increasing paper work, constant monitoring requirement (as always stated in every SLA) and extended lead times. Again this is contradictive towards literature review which is looking at IT outsourcing as a view from a company who needs it due to lack of advanced IT expertise. ATO sees IT outsourcing as a solution for their most ordinary IT functions not worth the hassle.

IT Outsourcing Comparison Table

	Literature	ATO
Driver / Benefits	Rapid development in IT world Minimising risks in IT investment Lack of expertise in internal IT staff Waiting the technology matures Focusing on core business activities Operational cost reduction	Cost saving Focusing on advanced technologies
Functions outsourced	Hardware maintenance Programming Software maintenance Application analysis User training ERP applications	Network maintenance Level 1 & 2 helpdesk
Potential problems	Lack of experience in outsourcing Conflict of interests Dynamic IT requirements	Additional paper work Constant monitoring Extended response time

Figure 4

Conclusion

Studies in this paper found that different concepts can be applied to IT HRM and Outsourcing. This is due the fact that every organisation has different culture and orientation. Most strategies can be used for most ordinary organisations. For the reminding ones, IT HRM and Outsourcing have to be adjusted to suit their needs and this may not necessarily give the same benefits expected as many papers argued. Our studied organisations have clearly shown these variations and we found that the purposes may also vary depending on the level of expertise and financial of the organisation. This study has enriched our knowledge in both topics IT HRM & Outsourcing and their implementation especially in Australian public services.

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