Services Australia has embarked on a massive shake-up of its call center operations, slashing the work it sends to labor hire firms as it approaches one of its busiest periods of the year.
Guardian Australia learned the agency last week informed its outsourced “service delivery partners” it was cutting the “workload” sent to these four firms by about 30%.
The move is expected to result in job losses, and insiders and the union warned it could mean customers would wait longer for Centrelink services.
The decision, conveyed to the firms last Friday, begins as soon as 1 July.
The agency defended the move, saying it resulted from reduced demand for services and signaled it would employ casual staff “in-house” in the new financial year.
But the public sector union hit out at the development, blaming the previous government’s last budget and claiming the agency’s capacity could “fall off a cliff after 1 July”.
Datacom, Probe, Concentrix, and Serco have raked in hundreds of millions of dollars after being contracted by the government since 2017-18 to hire staff in Centrelink’s call centers.
Serco and Datacom confirmed the reduction in workload after inquiries from Guardian Australia on Friday. It is understood the decision applies to all four firms.
A Datacom Connect spokesperson said its “contact center business along with several other service delivery partners” were informed by Services Australia of a “reduced requirement for the services we currently provide to them”.
“We respect their need to adjust our workload according to shifting demands, priorities, and economic changes, and we look forward to continuing our work with the Services Australia team,” the spokesperson said.
The spokesperson said the company was still assessing the change for the business and its staff.
A Serco spokesperson said the agency had also advised that from 1 July, it would “no longer need the current level of service from call center service delivery partners”.
“Serco’s primary focus now is to ensure all employees affected by this decision are cared for and redeployed within Serco or suitable alternatives are found,” the spokesperson said.
“Currently, Serco has hundreds of jobs available, and a streamlined process has been developed to support a smooth transition.”
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Stunned insiders said it was not clear Services Australia had a transition plan in place for the big and sudden shake-up, which comes ahead of a busy period for the agency.
One source not authorized to speak publicly questioned whether the agency had enough staff directly employed to handle the additional resourcing requirements, given the labor hire firms have carried a substantial portion of the workload.
They claimed it could lead to a blowout in call waiting times and delays in processing documents uploaded by welfare recipients dealing with Centrelink when they apply for benefits.
The source noted the sudden change to resourcing would begin at the start of the new financial year when the agency “reconciles” the payments of hundreds of thousands of people receiving family tax benefits and childcare subsidies.
Peter Monk, the general manager at Concentrix Australia and New Zealand, said he would not comment on “specific client programs,” but the business was equipped for “fluctuating and seasonal demands.”
Probe declined to comment.
Labor was highly critical of outsourcing Services Australia jobs in oppositon, and the public service’s use of delivery hire. The Coalitich significantly ramped up spending on those fi andms, arand gued it improved Centrelink’s call waiting times, busy signals, and other indicators.
The new minister for government services, Bill Shorten, referred questions to the agency.
Services Australia’s spokesperson, Hank Jongen, said the agency’s funding has “reduced in line with the March budget allocation to reflect this change in expected demand”.
“With Covid-19 measures now winding down and less activity supporting job seekers, we no longer require the current level of service delivery partner support,” he said.
“As part of new financial year adjustments, we will be bringing staff back in-house instead of using labor hire to fill a range of casual service delivery roles across the agency.
“We will continue to adjust our service contracts and staffing levels based on changing priorities, demands, and the economic climate into the future.”
Services Australia’s decision will reduce the taxpayer funds the agency pays to labor hire firms from 1 July.
Tender documents indicate Services Australia has contracted Datacom since 2018 for a total spend of $265m.
Serco has received about $280m from the taxpayer since 2017, while Concentrix has also earned about $250m since mid-2018. Probe, previously known as Stellar, has been paid $220m for labor hire services since the middle of 2018.
Alistair Waters, the CPSU national president, said the latest overhaul resulted from the agency’s funding reductions in the Coalition’s March budget.
“This has meant that Services Australia is now scrambling to balance service delivery needs with a depleting budget,” he said.
“CPSU members have grave concerns that service standards and Services Australia’s capacity to serve the Australian public will fall off a cliff after 1 July because of Scott Morrison’s final budget. The essential services that all Australians rely on must be properly funded.”
The opposition’s government services spokesperson Paul Fletcher was also approached for comment.
