Federal outsourcing costs untouched despite budget caps: study

March 3, 2011

OTTAWA—If the federal government wants to get serious about spending controls, it needs to look critically at its ballooning outsourcing costs, says a new study released today by the Canadian Centre for Policy Alternatives (CCPA).

According to the study, by CCPA Research Associate David Macdonald, the growing and concentrated nature of outsourcing has created a shadow public service that works alongside the real public service—but without the same hiring practices or transparency requirements.

“Over the past five years, personnel outsourcing costs have risen 79%. While federal departments have had their budgets capped, expenditures on outside consultants have not been touched and remain above $1 billion a year,” says Macdonald.

“Outsourcing isn’t what it used to be. Contractors aren’t coming in for a week to do some filing, they are now being hired on contract for years at a time to work beside regular employees, “ Macdonald says. “This system of parallel HR is where government managers are turning after last year’s departmental caps.”

Four large departments—Public Works and Government Services Canada, National Defence and Canadian Forces, Human Resources and Skills Development, and Public Safety and Emergency Preparedness—make up half of all federal government outsourcing. Their payrolls increased by only 9% since 2005-06, but their personnel outsourcing costs exploded, rising by 100%.

“Without prompt corrective action, outsourcing costs will continue to soar,” Macdonald says. “With the federal government running a significant deficit, it is more important than ever to examine measures that offer potential savings while maintaining services.”

The study makes specific recommendations to help curb rising costs and make better use of the resources the government already has.


For more information contact Kerri-Anne Finn, CCPA Senior Communications Officer, at 613-563-1341 x306.