Group wants government to privatize operations

  • 2009-08-13
  • From wire reports
TALLINN - An Estonian group wants the state to privatize and turn over its back-room operations in an effort to improve efficiency and to cut costs, reports news agency LETA. Entrepreneur Jaan Pillesaar has formed a group with five other companies to take over book-keeping, HR management and IT management functions now operated by the state.

The group says that they are ready to take over these areas, with relevant public procurements, from the beginning of the next year. The companies would like to take over the so-called primary customer service level operations now performed by the government as well.
Pillesaar promises not to let any of the workforce go, and is prepared to offer all workers continued employment.

First year savings alone, says Pillesaar, can be expected to be "at least 10 percent, while the group pledges to cover all expenses and risks of IT procurement and software development. As the estimated gain from this move would be 150 million kroons (9.6 million euros), the expected bill to the government per year would start at about 1.5 billion kroons."
The state's current expenses come to 600 million kroons per year for its financial accounting, HR management and administrative work needs.

Deputy Secretary General of the Ministry of Finance Tiina Tamm, who is in charge of these areas, said that in September she will take to the government an analysis on merging all support services within state authorities, and their relevant proposals.
She says that it "is not impossible that a public procurement could be organized for buying certain services, and that these services would be bought from private companies." However, she added that "it may be best to centralize the support services within the state sector."
"If the information on the state's operations is held outside the state control, how do we guarantee that the information will remain protected?" asked Tamm, pointing out one of the potential problems in outsourcing support services.

She added that a matter of concern is also the fact that information and managerial decisions should not be taken away from the institutions, as the loss of these duties means managers also free themselves of their responsibility for results. Tamm noted that, in her opinion, "merging the support services is reasonable", but the official decision on it will be made in September.