How outsourcing can help the public sector

As the government’s Spending Review draws nearer, there will be many who are currently wondering how they will be affected by the coalition government’s continued efforts to streamline public sector services even further. The Spending...

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As the government’s Spending Review draws nearer, there will be many who are currently wondering how they will be affected by the coalition government’s continued efforts to streamline public sector services even further.

The Spending Review, due to be announced on 20 October, will set spending limits for every Government department for the period until 2015, with the aim of ensuring that they are operating to maximum levels of efficiency - so what will this mean for outsourcing?

It’s true that outsourcing is one of the industries that is expected to benefit from the government’s austerity measures - with some forecasting that it will do more harm than good.

Indeed, it seems as though the largest of all the concerns that have been levelled at outsourcing as a public sector solution is that it will inevitably result in a lower level of service, meaning that, despite initial cost-efficiencies, the taxpayer will end up footing the bill in the long run. But is this fair?

It’s probably worth noting that the private sector can typically call on far greater resources than government departments, which means that, particularly in the procurement sector, it can be far easier for them to execute some of the larger supply chain requests necessary when dealing with a large, national contract.

For example, I recently read a report about the NHS’s requirement to source 47 million cotton wool balls for the health service.

It made the point that the NHS were extremely doubtful that the order could be delivered through the public sector, and certainly not as quickly as they were eventually delivered by international logistics group DHL, to which the NHS’s had outsourced its supply chain. Incidentally, it achieved cost savings in excess of £200 million in the process.

Of course, it’s also true that if the public sector rushes into outsourcing, without first ensuring that their service providers are a good cultural fit, or that they can deliver an improved service, then problems will arise.

Perhaps then, the only danger, is if public sector departments look to outsource cheaply, at the cost of improved service - although it’s worth pointing out that by initiating a project of any description based on cost alone, it’s likely to end in failure. If performed correctly, however, and for the right reasons, it’s clear that outsourcing can achieve real results for the public sector.

However, perhaps the real question that the outsourcing naysayers should be asking is whether or not there is a more obvious way to cut public sector costs, and increase efficiency?

In a week in which it was announced that more than 9,000 public sector workers have higher salaries than the Prime Minister, it’s a question that’s well worth addressing.

*The National Outsourcing Association’s Public Sector Special Interest Group will be holding a seminar on Public Sector Austerity on 30 September at 1, Whitehall Place, London. Please contact Natalie Milsom on 0207 292 8689 for more details.