Online service demands will drive outsourcing, futurist says

CHAPEL HILL, N.C.—James Canton thinks he has seen the future of government, and it
is outsourced. Citizens accustomed to online consumer services will demand the same
convenience from government agencies, said Canton, president of the Institute for Global
Futures, a San Francisco think tank. But government cannot afford the time and money to
develop information technology resources to satisfy them, he said.

“There is going to be a service lag,” Canton said in his keynote speech at
the recent Technology in the Park Summit, sponsored by high-tech companies in North
Carolina’s Research Triangle Park and focusing on the convergence of voice and data

Canton predicted that Internet commerce would grow from an estimated $35 billion in
1998 to $425 billion by 2002. Three-quarters of online spending will continue to be
business-to-business, he said, but consumer transactions will become so commonplace that
taxpayers will expect to deal with the government in the same way.

Although online transaction processing will bring long-run cost savings, most agencies
lack the resources to develop suitable systems and will have to partner with private
companies, Canton said.

Agencies that have taken tentative steps toward online services stop short of full
interactive capabilities, he said. An exception is the IRS’ online tax filing system,
the cost for which was far more than most agencies can afford, Canton said.

He predicted government will be driven to outsource not only its online functions but
also its back-office operations.

Several sponsoring companies at the conference saw their futures in performing the
back-office operations rather than continuing to sell their hardware to the government.

Bell & Howell Mail Processing Systems Co. of Durham, N.C., for example, now sells
high-volume mail handling equipment to agencies, said Sue Austin, executive director of
integrated services. As operations shift from U.S. mail to e-mail, Bell & Howell will
supply online messaging and billing services instead of selling its equipment, Austin

“We need government IT leaders with a vision of getting a return on their
investment and squeezing more efficiency out of the Internet,” Canton said.
“They’re going to lose their jobs if they don’t innovate.”  

About the Author

William Jackson is a Maryland-based freelance writer.

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