Public sector outsourcing €“ get ready for round two

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So, it’s finally happened. The public sector has been told, in no uncertain terms, that outsourcing, real no nonsense outsourcing, will be necessary in 2010 and beyond.

After both the Tories and Gordon Brown’s ailing government both openly admitted that public sector spending cuts are necessary, those on the economic front-line are starting to work out what this actually means in reality.

The hard truth has been delivered this week by the CBI, a body those in public sector procurement will hopefully listen to. Its report, or ‘Blueprint for Balancing Budget and Supporting Economic Growth’, states that ‘an extra £120bn will need to be taken out of current spending to achieve budget balance by 2015-16’, this is no mean feat when you consider the various inefficiencies that have plagued the public sector in the past.

The report goes on to suggest, ‘allowing the private sector to provide non-core activities, such as back-room functions. This could save £30bn by 2013-14.’ While their estimates may be a little ambitious, they do serve to demonstrate the potential benefits of renewed outsourcing in the public sector.

But that’s the problem that many in the public sector are still struggling with; we’ve all been here before haven’t we? Remember that other public sector outsourcing rush, where the NHS' NPfIT overran by billions of pounds and DfES' Individual Learning Accounts, with endless overspend and internal issues. Let’s not even speak of the Child Support Agency’s seemingly endless IT saga.

The legacy of problems past is, understandably, a sizeable reticence towards commencing new projects. Those that have been stung by poorly delivered projects will be loathe to ‘dive’ back in, while those that watched from the sidelines as their sector counterparts were trounced in the press, will be keen for continuity above all.

Further outsourcing bashing by ITV this week, complete with tacit allusions to the NHS (although the health service was in no way implicated in the programme), will do little to boost confidence.

But the change is coming and there are various reasons why this isn’t a bad thing. For one, as we’ve seen, these cuts will have to come from somewhere. Eking out another £30 billion, one quarter of the additional savings stipulated by the CBI, just cannot be done by simply being a little more efficient.

These are big numbers, it means transformation, so increased outsourcing has to, and will, happen next year.

The other reason is the increased maturity of suppliers and those responsible for outsourcing in the sector. Just last week we NHS Shared Business Services won two awards at our annual ceremony for both Best BPO Project and Outsourcing Professional of the Year.

The joint venture, from the Department of Health and Steria, has gone from strength to strength after its creation in 2008. Just recently a further eight NHS bodies have signed up with the organisation and there’s seemingly no stopping them.

So, this time around the industry will have to look back at outsourcing and actually get it right and it’s examples like NHS Shared Business Services that will help them do so. The NOA is also doing its bit with the launch of its Public Sector Transformation Steering Committee, set up to develop and disseminate best practice outsourcing advice for public sector outsourcers.

The sector will need to draw on this combination of best practice advice and visible success to ensure that public sector ‘outsourcing 2.0’ both cuts costs and maintains the service that the UK public deserve.

And the future? Maybe the public sector moves away from DIY to commissioning services!

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