Surge tipped for public sector outsourcing

The public sector will experience a surge in IT outsourcing through 2010 as it grapples with budget cuts, predicts the National Outsourcing Association (NOA), as the spending deficits caused by the UK government’s banking bailout pressure public sector IT managers into outsourcing as a cost-cutting tactic.

Although outsourcing is not new to public sector organisations, the surge over the next 12 months will be much more wide scale, the survey of NOA members suggests, with public sector procurement professionals needing to use outsourcing to reign-in expenditure while maintaining service delivery levels.

The public sector must “explore more shared services and outsourcing options after the General Election”, avers NOA Offshoring Director, Mark Kobayashi-Hillary: “Efficiencies mooted in Dr Martin Read’s Operational Efficiency Programme (April 2009) won’t be enough compared to the amount of government borrowing going on,” he says. “The sector will be forced to explore extensive changes, and new operating models rather than just efficiency drives if they want to escape from this [expanding] black hole.”

The NOA survey’s other finding’s include:

  • ‘2010 will see a further revision of multisourcing or multivendor deals as end-users try to create simplicity in their outsourcing: focusing on a smaller pool of suppliers will also help companies reduce governance costs’.
  • ‘Environmental concerns will come back to bite those who thought they had been forgotten in recession: some parts of Carbon Reduction Commitment will become law, and suppliers will need to understand it, and be aware of the supply chain implications’.
  • ‘The UK will be out of recession in 2010, joining those European countries that have already returned to growth, and leading to a boost in confidence: many will be asking their outsourcing suppliers for increased capacity to support renewed growth’.

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