Is the government biting its nose off to spite its face?

It’s been a tough week for those of us with a vested interest in the outsourcing industry - and not just because of the difficulty of returning to work after the recent spate of Bank Holidays. Instead, those who had hoped that the...

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It’s been a tough week for those of us with a vested interest in the outsourcing industry - and not just because of the difficulty of returning to work after the recent spate of Bank Holidays.

Instead, those who had hoped that the government’s commitment to making savings would result in a boom in the outsourcing industry were in for a shock, after it was revealed that a document leaked to the BBC had cast doubt on the government’s willingness to embrace outsourcing as a means of delivering public services.

We’ve already seen Suffolk County Council decide to ‘pause’ its plans to outsource to the private sector…so how much should we be worrying about this apparent turn in events?

It’s interesting to note that at least one leading support services provider, Serco, has already taken the time to dismiss the importance of the reports, and even gone so far as to state that it expects more medium-term opportunities to come from outsourcing public services in the UK.

Meanwhile, software provider Infosys has rightly pointed out that the current negativity surrounding outsourcing could hurt the business prospects of British-based organisations. Perhaps, however, it might be more prudent to ask whether the government has a plan in place to find the level of savings it has promised by using charities, social enterprises and employee-owned organisations?

On the face of it, it’s easy to understand why Francis Maude could see use of wholesale outsourcing as a ‘political risk’, particularly given the somewhat hysterical, knee-jerk reaction we’ve seen from some quarters in recent months, many of whom have have delighted in painting all outsourcing suppliers - unfairly in my view - as self-serving, greedy ‘fat cats’.

However, I do think it’s worth raising the question of how big a political risk it will be for the coalition government NOT to use private sector organisations as much as they can.
Consider for a moment the political ramifications if, over the course of the next few years, the government discovers that not only has it not been able to make significant savings as a result of its determination to look for alternatives to the private sector, but that public services have also become less efficient as a result?

The choice to use private sector companies to supply public services is one which has to be made for the right reasons - not merely as a means of easing political pressures, and it’s clear that if the government really is serious about making cuts then it must find the best way of achieving its aim.

Of course, outsourcing all contracts might not be the best answer for all public sector departments, and it’s clear that charities and social enterprises have a role to play, where it is appropriate for them to do so.

However, if the government really is going to insist on scaling back use of outsourcing to provide public services, then it will be interesting to see what their plan is for the next few years, and whether or not they have one! If not, it may be a case of it cutting off its political nose to spite its face…

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