More than 80 people will have left Inland Revenue's ICT team by December 2019, with a further 100 or so leaving over the next two to three years.
Those redundancies will leave around 90 people remaining in the team, compared to around 330 before the department launched its $1.8 billion transformation programme, revenue minister Stuart Nash reported to the government administration and expenditure review committee this month.
IRD is now looking at decommissioning it's heritage infrastructure and the infrastructure it has built to support co-existence between its legacy and new systems.
"The focus on retiring heritage systems and processes will increase, as is to be expected at this stage of transformation," Nash reported.
One big target to be off the department's nearly 30-year-old legacy "First" system, which runs on Unisys mainframes, by 2021, and running on its new "Start" software, which is being delivered by US company Fast Enterprises.
"Changes are being made to Inland Revenue’s organisation design, workplace technology and its enterprise support services to support a greater focus on customers and the use of information and intelligence, and on faster and more cost-effective delivery of policy outcomes," Nash reported.
The adoption of commercial-off-the-shelf technology and cloud-based solutions, and the greater use of third parties, mean Inland Revenue requires different capabilities for the future.
These changes will continue over the next two years as the nature of Inland Revenue’s work changes and to ensure the department can operate sustainably.
"They have been built into Inland Revenue’s funding model and, once transformation is complete, baseline funding will reduce."
Other changes are required to ensure Inland Revenue has the skills and capabilities it needs for the future, Nash reported.
"This means that a number of permanent employees will leave Inland Revenue over the next two years, some voluntarily and others not."
Inland Revenue has increased its investment in developing the capabilities of its people, the minister said. This is intended to ensure people have transferable skills as work changes, and have opportunities to develop new skills, such as digital literacy and data analytics.
These efforts will continue into the 2020s.
"Inland Revenue will continue to work closely with its people, to provide them with choices where it can, and with the unions, to ensure change is managed in a considered way," Nash reported.
"At times, challenging conversations will be required."
Discussions with external assurance providers suggest, however, that delivering business transformation continues to require Inland Revenue to operate "close to the edge of its capacity and capability", the central agencies (Treasury, State Services Commission and Government Chief Digital Officer) commented on the report.
"The Treasury observes that because ministers are increasingly seeing Inland Revenue as a ‘centre of excellence’ for managing IT-based change, that it may seem appealing to them to use Inland Revenue as a provider of IT services to other parts of central or local government.
"We suggest ministers take a conservative approach to adding any new expectations to Inland Revenue during this time, and that any future change to the function of the department and the expectations for the commissioner are worked through in consultation with the State Services Commission."